Establishing Strong Compliance Practices Has Never Been More Important – Synthetic Fraud Is On The Rise

 

                     By: Myril Shaw - Dealer Profit Services 

Of course, Compliance includes the manuals, the locked cabinets, the cross-cut shredders, the regular inspections to prevent allowing identity theft, etc.  The other side of compliance is preventing yourself (the dealer) from becoming a victim.

"Easy"," you say.  "Run the OFAC, check the credit bureau, confirm the Driver's License – I'm good."  Well, sadly, it is not that easy.

A new form of Identity Theft known as Synthetic Fraud is on the rise.  It is estimated that last year auto dealers saw 2.7% of their credit buyers actually be synthetic and that synthetic fraud presented a potential loss of between $500M and $1B.

Synthetic Fraud is only a matter of time – and you won't like it.

The difference between "normal" Identity Theft and Synthetic Fraud is that, while with traditional Identity Theft someone will normally notice something on their credit report, credit card statement, or bank statement, with Synthetic Fraud there is no someone to notice.

Synthetic fraudsters take their time.  They will generally buy a social security number or numbers on the dark web.  These will be from people who are deceased, a minor, or in some other way are no longer associated with active account individuals.  They will create a name.  They will apply for credit and get declined – but by so doing establish a file in the bureau.  They will apply again for a low limit account and they will gradually build up a full credit profile for a non-existent individual and they will pay the bills along the way – so they end up with good credit.

When they are ready, they do the "bust-out".  They purchase the $75,000 car or boat and then, poof, they are gone.  The lender is going to ask for a buy-back.  The unit is gone.  There is no trace and there is no recovery – only loss.

The fraudsters will typically mange 10's to 100's of these synthetic identities at one time.  After their "bust-outs", they will sell their purchased units for discounted cash to unsuspecting individuals and simply disappear with the money.

So…the other side of compliance is being diligent about who is receiving credit – and it is not necessarily easy.  Synthetic fraudsters are VERY good at what they do.  It is up to you to do you best to detect these and to document your efforts along the way.

What can you do to give you at least a chance of identifying Synthetic Fraud efforts:

• Verify what you know about an individual based on their Social Security Number – The first three digits of the SSN show where a person was born – have a chat with them about their birthplace
• Be immediately suspicious about limited credit profiles – Synthetic fraudsters typically have credit profiles that show strong credit but few accounts. When you see a limited credit profile from an individual who, by age, should have had the opportunity to establish a larger profile and investigate why
• Confirm addresses and residences in multiple ways – Remember that payroll statements and records have their own black market – and getting fake proof of income is not hard, so don't rely on income statements to prove addresses
• Train your team – if you see something, say something – anything odd on a credit application, bureau, or supporting documents needs to have a light shined on it – no matter how important a sale may be, if it is a "bust-out" purchase it will cost way more than a lost sale

Just the "standard" compliance elements are all critical.  Protecting against Synthetic Fraud and being proactive against all forms of fraud will save potentially millions of dollars – and documenting those efforts will help in supporting your claims if needed.

Protect others – protect yourself – make Compliance a Priority and not an afterthought!

                    Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

 

The Power of 20 – Continual Improvement – 20 Groups Aren't The Only Way – They Are A Great Way

  

By: Myril Shaw - Dealer Profit Services 

 Full disclosure, we do not facilitate 20 Groups.  Also, full disclosure, 20 Group dealers make up a large percentage of the Boating Industry Top 100.  We do enjoy working with 20 Group dealers.

David Parker Founder/Owner/Director of Parker Business Planning does, among other things, facilitate 20 Groups.  He likes to talk about the four modes that dealerships can be in:

• Growth Mode – always looking for improvement

• Trouble Mode – not succeeding like they would like, and knowing it

• Steady State – content

• Know It All – To smart to learn anything new

The key to these four modes is that Growth Mode is healthy and will continue to improve.  Trouble Mode recognizes that they have issues and is actively seeking improvement.  Steady State and Know It All are both in Trouble and just don't know it.

20 Groups are a great way to move out of Trouble and maintain Growth.  20 Group dealers share best practices.  Learn from each other.  20 Group dealers are focused on Continual Improvement.

It is certainly possible to grow and improve without being in a 20 Group.  It is possible to lose weight and get the best shape of your life entirely on your own.  It is easier in a group.  Getting motivation from others and providing motivation is a great way to improve. 

Dealers learning from dealers drives improvement.  How many ways can dealers share and learn from each other:

• Service bay tips, techniques, and profits

• Personnel management and staffing levels

• Sales, signage and advertising

• Revenue targets

• Profit targets

• F&I profit levels and targets

• Compliance approaches and focus

• Industry trends

• Manufacturer issues

• Insurance and protection topics

• And on and on and on

As a provider of F&I and Compliance excellence, we are always looking to make the best and those seeking to improve better.  We are always excited to find dealers who are hungry for growth.  We find them most often in 20 Groups.

Are you in a 20 Group today?  Stay there.  If not, why not?

There is power in 20 – 20 Groups are not the only way to drive continual improvement.  They are a fantastic way!

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

 

A Revitalized Consumer Financial Protection Bureau (CFPB) Makes Good-Faith In Compliance – Including 100% Turnover – Vital

 

 By: Myril Shaw - Dealer Profit Services 

 

You can read the full statement from the CFPB here (https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-rescinds-abusiveness-policy-statement-to-better-protect-consumers/).

This increased investigative and enforcement activity makes it more important than ever that dealers commit to and can document their "good-faith" efforts to meet all compliance standards and guidelines.  The CFPB will be making themselves more visible to consumers and so the odds of a compliance investigation will be increasing.

This will also capture the attention of class-action attorneys.  CFPB actions are a matter of public record.  These lawyers will be watching for an opportunity to "pile-on" and bring actions not just on behalf of the named consumer but will also be reaching out to other consumers who may be potentially similarly aggrieved at other stores.  This brings into play not just federal fines, but also the cost of legal proceedings and settlements.

If there is any sentence in the CFPB Statement that should get everyone's attention, it is this: "Going forward, the CFPB intends to consider good faith, company size, and all other

factors it typically considers as it uses its prosecutorial discretion."

Also of consequence is what the CFPB looks for.  In order to determine good faith, they will be looking for the "usual suspects":

• Up to date, accurately executed Compliance Documents

• Demonstration of a trained Compliance Officer

• Evidence of up-to-date Staff Training

• Appropriate environment: Cross-Cut Shredders; locking filing cabinets; locked Finance office; etc.

• Proof that regular site inspections are occurring – looking for sloppy compliance behavior and continually bringing compliance importance to the forefront

• Best practices in the handling of non-public, personally identifying information

• Active procedures for identifying Identity Theft

The CFPB is also hyper-focused on differential treatment of consumer classes.

This makes a well-enforced 100% Turnover policy absolutely critical.  Every customer MUST receive the same presentation regarding their ability to obtain all relevant Protective Products.

What constitutes "classes" when it comes to Protective Products?  

• Cash versus Finance

• New versus Used

• One Make/Model versus another

• Age

• Income level

• Unit price

• …

It cannot be up to a salesperson to make a situational determination about who talks to a Finance/Business Manager – this is a conversation that needs to take place 100% of the time – no matter what.  It must be a store policy enforced from the top down and documented with the customer executing a document that they have received the sale treatment as all others.

This may seem like a nuisance.  It may seem like overkill.

How much of a nuisance will federal fines and lawsuits be?  It may only be a once in a lifetime event – but that event could cripple you and your store for years to come.

Good faith matters.  

Close only counts in horse shoes, hand grenades,  and compliance!

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

 

Compliance Is Not A Manual – Not Even A Red Flags Manual

 

          By: Myril Shaw - Dealer Profit Services 

A sadly, not uncommon comment is some variation of, "We need to make sure our store meets compliance standards, we need a Red Flags Manual."  Well, unfortunately, having a Red Flags Manual does NOT make a store compliant.  It doesn't even, by itself, demonstrate a "good-faith" effort to address compliance issues.

Why does any of this matter?  33% of Americans are victims of Identity Theft.  25% of those found out when they were notified of unpaid bills.  30% saw money missing from accounts or unknown credit card charges.

Some Identity Theft is actually related to terrorism.  Some Identity Theft is simply a crime of greed or convenience.  Your store can be involved on the "receiving" side – someone used Identity Theft to buy a boat, RV or other Powersport or recreational vehicle.  It could be involved on the enabling side by allowing an identity to be stolen through inappropriate handling of personally identifiable non-public information.  There could be money laundering activities associated with any of these – or independent of these.

Let's start at the beginning.  The Red Flags Manual does discuss Identity Theft, its recognition and prevention, but there is more.  The Disposal Manual and the Safeguards Manual discuss the appropriate protection, storage, and disposal of personally identifiable non-public information in the form of credit applications, pictures of social security cards and driver's licenses, etc.  There are needed as well.  The OFAC Manual addresses prevention of selling to or engaging with terrorists, terrorist organizations and their affiliates.  Finally, the USA Patriot Act Manual lays out issues around money laundering.  All of these are required.

Simply having the full set of manuals doesn't even come close to demonstrating "good-faith".  These all must be read, understood, and signed by the dealership's designated Compliance Officer.  The Compliance Officer bears the responsibility for training and enforcing compliance policies and practices.  Every employee who handles or has access to personally identifiable non-public information must be trained and that training must be demonstrable and regularly reinforced.

With all of that, demonstrating a "good-faith" effort at meeting good compliance practices is closer – but still not complete.

There is the issue of physical equipment placement, protection, and control.  It is easy to leave copies of documents that need to be protected on copiers, fax machines and scanners.  Is all this equipment in controlled locations accessible ONLY by trained personnel who require access to personally identifiable non-public information?  Are these documents, when destroyed, destroyed with a cross-cut shredder?  Straight-line shredders are not acceptable for compliance purposes.

Are documents stored in locked filing cabinets?  Is the Finance office locked/lockable?

Finally, does the Compliance Officer and/or other management do regular "walk-arounds"?  On at least a weekly basis, but at unpredictable time, the Compliance Officer, or someone designated by the Compliance Officer should just do a "casual" office walk-around.  They need to be checking on the following:

• Are locked cabinets locked if there is no one around?

• Are there personally identifiable non-public documents unattended on copiers, fax machines, or scanners?

• Are there personally identifiable non-public documents lying unattended on desks or in unlocked desk drawers?

• Is the Finance Office locked if vacant?

All of this should be documented showing the date and time of the walk-around and the compliance or non-compliance in each area.  If there is non-compliance, there should be notes showing the action taken.  This documentation should be included with the compliance documents.

When everything mentioned above is being doe, you are demonstrating a "good faith" effort to meet good compliance standards.  To be clear, doing all of this and everything cannot and does not ensure that you still won't run into a compliance issue or lawsuit.  Mistakes do happen.  In this case, when things do happen, having this evidence of a "good faith" effort will help as evidence that anything that has happened is not a result of negligence and will aid in the argument for lenience in any penalties.

Compliance is not a manual.  Compliance is a totality of manuals, processes, practices, and training – and even then, bad things may happen – but at least, the "good faith" effort argument will probably help!  (And it is just reassuring for both you and your customer, no matter what!)

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

What Stands Between You and a Major Penalty for Identity Theft – or other Compliance Failures

 

          By: Myril Shaw - Dealer Profit Services 

Compliance is often mentioned and known to be important.  No one ever questions that compliance in the areas of identity theft, protection against accidental engagement with terrorists in any form, or entanglement in money laundering transactions is important, perhaps critical, to a dealership.  Yet, action on this is often neglected or deferred.

Yes, this part of compliance involves five areas:

• Red Flags

• Disposal

• OFAC

• Safeguards

• USA Patriot Act

Yes, each carries its own rules and penalties and this is exactly the reason why, after talking and thinking about them, so many dealers just put them in the closet.

Why?  There are several reasons:

1. It seems complicated – who even knows exactly what is required?

2. It is time-consuming – there are documents and there is training and who has the time or the knowledge?

3. It is distracting – compliance is not the core business and most dealerships are probably doing most of the things right – it can be ignored, or at least delayed.

4. It is expensive – getting the documentation and the training will take hours, which is an expense in terms of time lost and they will cost thousands of dollars.

There are just a couple of problems with this way of thinking.  

First, and perhaps most importantly, the cost of failure can add up to hundreds of thousands or even millions of dollars in fines and legal fees, and perhaps even jail time.  The real issue here is that even if a single dealer is doing things 80% correctly and they get caught up in a class-action lawsuit because of a dealer up the street if they have not everything that could reasonably do, a failure that is not even theirs could cost more time and money than any compliance effort could possibly have cost.

Second, while it does require some research and some investigation to address the issues and the requirements, it is possible.  It is also possible to find an organization that can support your efforts.  Is the cost worth the possible negative consequences?  That is a calculation that only the dealer can make.

Third, doing these "compliance things" is valuable to your customer, your country, and your company.  Protecting your customer should make sense even there were no potential penalties.  Protecting your country from terrorists should make sense.  Protecting your company from potential penalties should make sense.

There is a bottom line here, and it is this.  Doing the right thing for your customer, your country and your company should be a natural instinct and a natural response regardless of cost or convenience.  

Now, there is an added benefit.  The government has said that a "good faith" effort to address these compliance issues can, and probably will, result in leniency in the event of an issue.  Close counts – giving best effort matters and can have a huge impact on the outcome of a negative compliance event.

Doing things right, is the right thing to do – compliance is not just a legal issue, it is a customer service issue, country respect, and company honor matter.

When you make a "good faith" effort to satisfy compliance requirements you win in uncountable ways!

Just do it!

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.  

 

 

Happy 2021 – Are You Looking For A FANTASTIC Year, Or Are You Settling For Good Enough And Comfortable?

 

          By: Myril Shaw - Dealer Profit Services 

Here is a hint – you can't have a great 2021 by settling for good enough…

Are you setting stretch targets for your sales?  Are you training your sales team to maximize all aspects of profit?  Are you ensuring that you have enough new and used inventory to meet demand and allow for exceptional results?

It is a guarantee that at the end of 2021, if you look back and say, "Well that was good enough", you will be disappointed.

The only thing standing between you and fantastic is, well…you!

Let's simply drill down on your F&I results.  We will work with some easy sample numbers which you can quickly adapt to the reality of your store.

Let's assume that you did $10M in unit sales in 2020.

Are you targeting 10% to 20% growth in 2021?  (Or are you simply saying that flat sales are good enough?)

With $10M in unit sales, what was the net F&I contribution to your net profit?  (If you don't know the answer to that question, it is definitely time to figure it out.)  

You should not be comfortable in any way – not even good enough – if your Net F&I Profit on Unit Sales was one penny less than $400,000 (4% net F&I profit).  So in 2021, you have to be focused on $440,000 or $480,000 just based on your new unit sales – and you should be driving for 4.5% Net F&I profit on unit sales – so if you grow your unit sales by 20% and your F&I net profit to 4.5% - your F&I will be adding $540,000 directly to your bottom line.

Oh, you're okay with a 3% contribution from F&I, then you are okay with adding only $360,000 to your bottom line and leaving $190,000 on the table – REALLY?

Why would that be good enough?  Now the excuses start:

• Our sales team is comfortable with the current F&I profit

• We don't want to rock the boat

• We'll make it up somewhere else

• Blah, blah, blah

A leading 20 Group facilitator and industry consultant, David Parker, founder of Parker Business Planning talks about the for modes that dealerships can be in:

• Growth mode – always looking for ways to improve and constantly stretching for improvement

• Trouble mode – doing badly, knowing it and actively seeking help

• Steady state – We are comfortable and don't want to do anything to upset our comfort level

• Know-It-All – We don't need help because we are so smart already

Dealerships in Steady state or Know-It-All are actually in Trouble, they just don't know it yet.

Where are you?  Are you ready to drive your F&I profits to new, previously unseen levels?  Are you ready to institute the training and processes to facilitate extraordinary F&I success?  Are you ready to set stretch goals and targets?  Are ready to ensure that your F&I expenses are minimized while your success is maximized?

A focus on continual improvement in all areas is what Growth Mode is all about – and Growth Mode will drive your 2021 success!

Here is to a FANTASTIC 2021  and currently unbelievable while actually achievable F&I Profit in 2021!

 

 Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.  

Ho, Ho, Ho – The Plan To Make You Merrier!

 

                   By: Myril Shaw - Dealer Profit Services 

We are in the season of celebration.  This has been a very different year – and for those of us in the recreational industry, it has mostly turned into a spectacular year…at least in terms of unit volume.

How has your profit been?

Not gross profit…that has almost certainly been up.  Have you made as much profit as you could have on your F&I Profit?

"Oh, that…it doesn't really matter as long as we are making a solid profit", is a common response.

Well, let's look at some real numbers.

Here are some sample numbers – you can do the math to see what this could mean to you.

Let's say that you are selling $10M per year in unit sales.  Are you making $400K on your F&I Profit (Net – after salaries and other costs)?  Oh, you don't know – well go dig in and look.  The odds are that you are not.

If you are a $5M unit sales store, then you should be doing better than $200K of F&I Net Profit.

These are not numbers that you typically spend a lot of time looking at.  You should!  You are probably making a Net Profit on your Unit Sales (absent F&I) of just 3% or a little more.  You could be doubling that Net Profit with the right F&I practices.

Wouldn't you like to be even merrier next year at this time?  Wouldn't you like to double your net profit?  Well, you can!

It starts early.  Make the fact that you offer financing visible on your website, at your store, in your advertising.  Everyone needs to know that you are a one stop shop when it comes to buying and financing.

Introduce F&I early, although not by that name.  F&I has lost luster through automotive.  Rename F&I as Business or Delivery and introduce them to your customer BEFORE the shopping process even starts – let your customers know that these are folks that will make their lifestyle experience happen and that they will be talking to them once they have decided on the unit of their dreams.

Train your F&I folks (okay, Business Managers or Delivery Coordinators) in the two basic premises of F&I best practices: 

• The Hypocratic Oath of F&I – First do no harm – No matter what, never cost the sale

• You never get more than what you ask for the first time – Always try to maximize profit while having a graceful (not just "Oh, okay, I'll back down") plan and conversation about backing away from the maximum in mind and ready

100% Turnover is the big thing in maximizing profit.  Every customer, every time, gets introduced to your Business Manager (okay, F&I Manager renamed) so that they have the opportunity to switch to finance and then to purchase protective products.  You'll never achieve your goals without 100% turnover.

Do you want a merrier New Year?  We will toast to that!  Follow the guidelines that we have laid out  and you will be oh so jolly next year!

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.  

When You Focus On The Lifestyle It All Makes Sense

 

         By: Myril Shaw - Dealer Profit Services

Somehow there persists a perception that maximizing F&I profit comes at the expense of the customers.  Nothing could be further from the truth.  When you look at this from the lifestyle perspective everything makes sense. 

 COVID 19 certainly changed the way, and more importantly the why, customers looked at purchases in the recreational space. Why did they want an RV?  Why did they want a boat?

It all became about the "staycation" (we will credit John Haymond, SVP at Medallion Bank and President of the NMLA).  People wanted to get out, to have fun, to relax, to enjoy time with their family.  It was no longer reasonable or safe to go on travelling vacations.  Flying was somewhere on the list of difficult, not fun, or flat-out unsafe.  Hotels were questionable.  So, what happened?
Boating and camping/RVing became the go-to getaway.  These recreational opportunities turned into a flood of recreational purchases.  People did not NEED these purchases – they WANTED these opportunities for fun.  F&I enabled these purchases.

 Why did we set F&I performance targets?  Well, certainly, it was part of the management requirement.  More importantly, it drove a level of behavior.  What was the result of that behavior?  Every customer received the best opportunity to engage, obtain and enjoy the recreational lifestyle.  These targets drove customer satisfaction.  F&I enhanced customer satisfaction.

How did the storewide F&I process help your customers?  A fully integrated, early introduction through 100% Turnover process ensured that every customer had the same opportunity to obtain every lifestyle enhancing benefit in their purchase.  This might have been the opportunity to get a loan at a great rate.  It might have been the ability to obtain protective products that will enhance their lifestyle purchase.

 What did the offering of Protective Products do?  These products helped to ensure that the lifestyle that your customers were looking for was safe, easy, and ensured – no matter what happened.  These products made it easy for you and your customer decided that it was time to trade in that old unit, it had a maximum value so that they could step up easily.

 100% turnover ensured that every, EVERY, customer had access to all of the lifestyle enhancing options.  Cash or finance, they all could avail themselves of every option to simply focus on enjoying their lifestyle.  Every customer could keep their investments whole and still enjoy the lifestyle.  Every customer could sleep solidly knowing that no mishap would cost them money or time from their lifestyle.

 It really is all about the lifestyle.  Focus on the lifestyle and F&I profit will be a natural and lucrative outcome!

 

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.  

'Tis The Season For A Jolly Review of Your F&I Profit! Is It Time To Change?

 

          By: Myril Shaw - Dealer Profit Services

 

Well, here we are, the heart of the slow season.  Thanksgiving along with Black Friday has now come and gone.

Things are slow.  It is time to evaluate and make decisions about how to be better.

This is the season for change – change to make you better.  This about change to make you jolly!

This is just one blog post.  We can't address everything here.  We can provide some guidance on your F&I performance.

Let's put some real numbers around this that will make it easy for you to adjust as they may fit your store or stores.

Let's say that you sell around $10M in Unit Sales per Year – and let's say that you finance 50% of those (which is less than you should be financing, but that is a different message.)

So, you are financing $5M per year.

Are you delivering at least $400K in F&I Gross Profit on this?  That means, are you seeing Reserve plus F&I Net Profit on Protective Products of at least $400K each year.  If you are not, you are missing a significant profit adder for your store.

Now, let's assume that you are seeing $400K in F&I Gross Profit – once you subtract your F&I salaries, your credit pulls, your storage and disposal costs, your floor space costs and your compliance costs (oh, not really thinking about Compliance – you should be – the costs there could be huge), are you seeing at least $320K F&I Net Profit?

Oh – you don't know – well, that is whole different issue.  F&I should be a significant individual and individually measured contributor to your bottom line.  If that is not the case, talk to your accountant or controller.  F&I profit matters and it matters as it's own profit center.

So, now that that you are looking at F&I as its own profit contributor, if $5M of financed deals per year is not adding $320K in net profit or 6.4%, you are underperforming.  

Time to change!

Here are the metrics you need to be seeking…and if you are missing them, you are losing profit and money:

• 8%+ F&I Profit on the Amount Financed

• 4.0%+ F&I Profit on Unit Sales

• 50%+ Contracts on Finance Applications

• 65%+ Protective Product Penetration on Contracts

Making this work for your store sales and numbers is easy – it is simple math – take your annual unit sales and divide by $10M then take that result and multiply it by our target results:

• $400K times your result is your target Gross F&I Profit

• $320K times your result is your target Net F&I Profit

The odds are that you are not there.  Look honestly at your numbers.

This is the season when change is as easy as it is ever going to be.

If the time to change your profit for the better is now – make the needed changes and DO IT!

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

 Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.  

 

Happy Thanksgiving – Really – It Is Really Special This Year – And There Are Lessons (F&I Profits Should Increase)

 

              By: Myril Shaw - Dealer Profit Services

 

      This has been an interesting year, to say the least.

      For many of us it has meant health challenges for ourselves and those close to us including our fellow        workers.  It has certainly impacted our friends in the dealerships that we work with. If it has, and you           are reading this now, giving thanks is appropriate.  

       For those of you who may have suffered personal loss in this challenging time, we offer our                         sympathy and our support and stand ready to help you in any way that we can.

       If you are among the lucky who have not had health related challenges, give a BIG thanks!

      No matter your personal circumstance, this is the time to give thanks simply for being able to read this        (not that this is special) and to engage in your business in a positive way after what has been a wild             year.

      For the Recreational Industry this year has been strange, unexpected, largely delightful and fully                unpredictable.  With a normal start and then the expectation of doom through to results we never                could have expected and now inventory shortages.

      What a year!

      So what have we learned?

      Digital retaiing really can work…and so can remote F&I.  We don't need to be face-to-face literally in        order to sell our products and to sell our Protective Products. Remote does not mean remiss – it                  simply means a new reality.  

       Has our world changed forever?

       Probably!  Not in the sense that we will never be face-to-face again but certainly in the fact that we             have learned to be much better digital and remote sellers.

       We have learned how to present our products online and digitally in a compelling way.  We have                 learned how to sell our Protective Products remotely (haven't we?)

       Selling Protective Products remotely takes a particular nuance.  It takes a skill that may not be natural         to all the in-store Finance Managers.  Certainly, these local Finance Managers have the product                   knowledge.  Certainly, they have the sales skills when looking at the customer.  It takes something             different when that customer is over the phone or on Zoom.

      Attaining maximum F&I profit is completely different in the days of COVID than it was in 2019 and          before.  It can be done…and fundamentally the rules have not changed.

      Virtual or physical, there must be 100% Turnover to your Business Manager.  In the virtual                           environment this is even more important  ensuring that you are meeting all the compliance standards           and requirements.  The Business Manager is THE person who can help the customer understand the          delight to be obtained through these Protective Products and the lifestyle protection that they ensure.

      In the Recreational industry these Protective Products are truly about protecting and enabling the                lifestyle.  They are far too important to be missed.  Face-to-face od remote, they are critical for the              enjoyment of the buyers.  They MUST be delivered.

      If you have not seen a major increase in your F&I profit this year then you definitely need to explore          what is wrong.  It is important that you do this right now because 2021 will almost certainly face the          same remote challenges without the pandemic bump in sales and the inventory challenges will                    remain an issue.

      F&I profit will, or should be, a major contributor and help your bottom line in a significant way in              2021 – will it be?

       It has been a year for which there has been much to give thanks and for which there has been much to         grieve.  Lessons learned…lets make 2021 an absolute year of awesome notwithstanding any of the             circumstances.

       Happy, Happy, Happy Thanksgiving!

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

 Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966. 

Compliance Is Not Just A Thing

 

                By: Myril Shaw - Dealer Profit Services

Compliance is boring.  Compliance is a pain in the neck (or other body parts.)  Compliance is never an issue for me.  Compliance is just something people talk about.

All of those are true…until…a violation happens to you!

It couldn't happen – you say.  I know my customers.  We check everything.  We protect people's information.

Easy sentences…do you know if they are actually true?  Are you ready for the consequences if they aren't?

There are several areas where you could be or could suddenly become in violation of compliance rules and regulations:

• Are you adequately confirming and protecting personal, private information?

      o Are there Deal Jackets with Credit Apps laying around unprotected?

      o Are you confirming the identity of the people you are dealing with?

• What about cash?

      o Are you carefully watching cash transactions?

      o Are you reporting cash transactions over $10,000 and are you checking on the buyers for cash transactions below that level?

There are some key steps you can take to avoid the following penalties:

• Red Flags (related to Identity Theft)

      o Up to $3,500 per violation in civil fines

      o Up to $2,500 per infraction to the FTC

• Disposal (related to Identity Theft)

      o Up to $2,500 per independent violation

• OFAC (sales to prohibited entities or individuals)

      o Criminal penalties of up to $1,000,000 per violation and/or up to 20 years in jail

      o Civil penalties up to $55,000 per violation

• Safeguard (related to Identity Theft)

      o Penalties up to $42,530 per violation

• Patriot Act (related to money laundering)

      o Penalties not specified however, any violation will also be covered by one or more of the above

If you don't want these, then do the following:

• Appoint A Compliance Officer

      o Your Compliance Officer will understand, train on and enforce your documented compliance polices.

• Documents Your Policies

      o These are the policies that everyone is trained on; that your Compliance Officers enforces and makes sure that all employees commit to; that protect you from compliance violations

• Train Your Employees

      o Make sure they understand the rules

      o Don't leave Deal Jackets or other personal, private information laying around

      o Why something feels odd, check on it

• Protect Private Data

      o Cross shred what you don't need

      o Lock up what you do need

      o Private and personal needs to remain private and personal

Compliance is not really a mystery.  It is not legal mumbo-jumbo.  It is common sense and it is what you would want for yourself.  Take the time to make sure you are doing it right in your store.  

Doing compliance right protects your customers – it protects you – it ensures satisfaction everywhere.

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

 Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966. 

Protective Products Protect More – They Protect Your Profits

 

 By: Myril Shaw - Dealer Profit Services

To some, perhaps many, selling extended warranties and other protective products seems more a burden than an opportunity.  The fear is that the process of trying to sell these products will "through sand in the gears" and potentially cost a sale – so the focus shifts to selling the unit rather than driving F&I Success through the enhanced profit provided by these protective profits. 

 

The recreational world is different than the automotive world.  In the auto world, the only real profit on a sale is driven, not through the profit on a unit, but through the profit provided by warranties and other protective products.  The pressure on the customer to purchase is high and sales motivation is, in fact, "this is how we make money."

 In the recreational world, the conversation and the motivation is completely different.  People are not buying boats, RV's or even motorcycles because they have to have them.  They are buying into a lifestyle, a vision.  While these protective products do provide great profit, they also serve to truly protect the lifestyle vision that the customer has.

An engine failure on the lake results in a tow and a fix with the warranty.  Flat tire – no problem – who carries a trailer jack or an RV jack – the Tire and Wheel Protection gets help to the customer.  Rips, stains, tears, chalking, yellowing – all protected with interior/exterior protection.  All of this goes to preserve and protect the customer's desired lifestyle. 

 It is simply irresponsible NOT to offer the customer lifestyle protection.

 Once everyone in the store understands this, it is time to focus on the profit.

 Paul Sheldon, RVP for Protective Asset Protection, says, "10% of the people will always to these products, 10% of the people will never take these products, the other 80% are ready."

 Michelangelo said, "The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark."

 The target for in-house F&I Protective Product penetration should be at least 75%.  Why would any customer not want products designed to help them have no worries and simple lifestyle enjoyment?

A great, menu-sold bundle of an engine warranty, accessory warranty, interior/exterior protection and GAP gives the customer great peace of mind and should profit 5% profit on the amount sold. 

 Add this to the reserve and suddenly there is 10% - 12% F&I profit on the deal.

 Do this on a recurring basis – make it a habit – and suddenly your store is gaining 4.5%+ F&I on unit sales – and all because you are ensuring a customer's lifestyle enjoyment is uninterrupted, no matter what.

 Happy customers and high profits – does it get any better?

 

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

 Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.