-By Eddie Coleman, Nov 12th 2008
For dealers who have built all or part of their business on special finance, changing profit centers in tough times isn’t as simple as changing creative on the next mail piece. Abandonment isn’t much of an option for most, nor is completely re-inventing the wheel. Many dealers however, are successfully doing just that. Still, the learning curve can be enormous and major shift changes can be riddled with uncertainty resulting in what feels like daily devotionals to second guesses.
Moving to the prime side of the business requires a shift in inventory, marketing, merchandising, mental conditioning, and sales process. Above all it requires a radical retooling on the phones from “Were you thinking of a light color or dark color?” to an “It doesn’t matter what you’re interested in, you’ve contacted the right place and I’m the right person” attitude. It requires a complete pre-owned, “A paper” transition from the vehicle being the purpose to you being the expert followed by a firm appointment set on the first call that will show.
With a mountain this size to climb, most dealers in special finance agree that changing sports isn’t the answer but changing the game (for the moment) is a must. Even for dealers looking to make the transition as the result of necessity or that looking- back-gut -check that tells them it’s the right move at the right time, an abandonment of special-fi all together is unlikely. On the flip side one of our stores has managed to close 58% of their walk-in traffic for the last 3 straight weekends and fund 93% with a median beacons in the high 400’s, delivering 71 cars in the first 10 days of November out of a single-point used car location. Go figure…
In the world of special finance everything starts with the advertising. Not in the business plan, necessarily, but definitely in the mechanics. The question is, how do you decide what do you do in the middle of the mess? What information do you look at and what direction is the right answer for your specific dealership?
Understanding the landscape
So let’s assume for a moment that you’re going to keep generating a small flow of spi-fi traffic just so you don’t get rusty, or perhaps just sticking with it through the fog 100% like many. With that in mind, here are some conclusions many dealers are coming to today regarding showroom traffic that we want to be aware of:
“I don’t need more traffic. I have all the traffic I need. What I need is to do better with the traffic that I have.”
For those dealers who don’t subscribe to that theory, you’re may hear something like… “I’m flooding the showroom with people that don’t have a prayer of financing a bicycle only to find my staff completely discouraged and the morale in the dumps.”
Then of course there are some general themes most everyone shares such as getting better credit customers in the door. All are very reasonable and caused by very real circumstances.
SIDE NUGGET: There are always better credit customers in your pile of spi-fi leads. It’s what you’re saying to them on the phone that’s dictating what percentage of them cross our threshold.
If you’re one of the dealers that is still trying to decide what your position should be in the current market, let me offer these thoughts: If we can’t control the banks, the economy, or how bad of a bath we took during the last book change, then let’s increase what we can control. If your game is off because you aren’t doing as well as you would like with the traffic you have then the only logical solution is to get more traffic. If it takes more swings to hit the ball, then we have to find a way to take more swings without dislocating our shoulders or completely bottom feeding. Staff expectations can be adjusted and morale can be realigned. These shifts are not easy, but neither is switching a business model. You may find the right answer is to do both.
With that said, let’s talk about special finance advertising that will truly move the needle. First things first. Vertical ads are yesterday. Offers like “$99.00 down”, “we’ll take “anything” in trade”, and the “$39.00 used car advantage sale” have lost most of their luster with prospects that actually stand a chance of being approved for a loan. It’s time to replace the hook with a real message. Develop a good one and you’ll rake in the market share that your competition is gladly giving away.
Understanding the strategy
The next most important thing is to “know thy strategy”. If your strategy is to go for better credit customers or to filter your responses with a message that makes people jump through more mental hoops, then be prepared to stick with it when times change and lenders loosen. People tend to remember what you claim to be about so make sure your self description is an outline for the long term and not just a quick fix.
On the other hand, if your strategy is to own the hearts and minds of the entire bruised credit public, you face bigger challenges followed by bigger opportunities depending on the message. This strategy means whether they have only mildly dinged up credit or their credit is so bad that they need permission from their parole officer just to apply, they’re still coming to see you. Right now that strategy means you need some fine cutting tools for making sure you get the right people in the door without alienating anyone. That is a tricky feat but one you can successfully tackle.
Step one: You need an alter ego
Advertising special finance from the platform of “the car dealer” is a risky move right now. Better bruised credit customers are more skittish than ever and when prospects get nervous they associate the message with the messenger more than ever. It’s like saying “You are who you hang around.” While that can be a good thing, the fact is that we don’t have time to change public perception entirely. We only have time to side-step it long enough to deliver a message that will be heard. In all our markets we’re finding out fast that people aren’t taking the advertising bait from dealers or banks quite like they use to. You need a middle ground. A podium from which you can preach a real message that won’t get mentally labeled before it gets delivered. One that doesn’t threaten before it can be responded to. The alter ego that has always worked for me regardless of market conditions or the weather outside has been a dot.com, geographically labeled, credit relevant, loaded with cars and completely absent of cleaver marketing hype within its name.
Medications to stay clear of
This might be the best time to stay away from TV and newspaper advertising. These mediums are the primary delivery agents of today’s news. Today’s news is scarier than ever, which stresses people out by just watching or reading it. Stress is defined as a force that distorts a thing’s true shape or form. When people are stressed they don’t receive communication very well. It’s difficult to deliver a solid message to a stressed audience. Consider instead going for mediums where people are in a better frame of mind such as radio, movie theaters, entertainment websites and events. These media tune you in to your private audiences. Deliver your message during a moment of emotional escape from today’s troubles and you’ll see response rates like never before. Learn to piggy back the moment.
Purchased leads and saturation mail seems to still be working in many markets. I’ve talked with at least 4 stores in the last 30 days that have mentioned it. Let’s look at why. First, purchased leads are typically skimmed off the top and farmed off bottom (search engines). When people are Googling about they’re in a more relaxed state, which is working right now. The dealers buy leads and ferret out enough real buyers to piece together a dozen or so car deals. Not sexy but it works.
Saturation mail is in the same closet in that it reaches its target while they are in a better state of mind, and the prospect has to physically hold onto it long enough to make a conscious decision to toss it. Many times, a mail piece gets looked at more than once. Once again, a less stressful environment combined with more time in front of the audience means a more mentally balanced prospecting opportunity. Both these mediums are really still just traffic builders, which leads me back to moving the needle in the areas we can actually throttle.
Radio (my favorite) trumps everything right now. The challenge with radio, however is that it’s the most complicated form of advertising there is. This paragraph is my pitch so I’ll keep it short. Not even the reps that sell it have much of a clue and the agencies are worse because they have to appear smarter that the stations. You can end up with the equivalent of hairspray in Santa’s beard right before Rudolph buzzes the tower. By the time Santa gets back to the North Pole his face looks like a co-op for parakeets.
The goal is to get to the place where your radio buy can be placed on cruise control but that’s no small accomplishment. The creative has to be right on the money, which is typically backwards from how our brains think. The stations, the rankers, the rates, the reps, the frequency all need to be dialed and then there is the time slot schedule. The time slots and which ones are the right ones are not as obvious as you might think. Take evening drive for example. Costs the same as morning drive right? But did you know that 64% people driving home from work spend over 50% of their time blabbing on their cell phones? Guess when they make the calls? That’s correct! Right when the song they were listening to ends. Tricky deal either way you slice it. What’s the benefit? Euphoria baby! You get the prospect on an undeniable high, which means you can win big. Ok all done with radio now.
Message Misnomers
Here’s a tactic that, if you can run with it, you can be assured your competition won’t. Stay away from first person advertising speak such as “We’re number one”, “We sell more Suzuki’s than Suzuki.” Now more than ever people, including you and me, are blind to self reference. Making major points is valuable and good info, so don’t get me wrong. What I’m talking about is a shift of consumer mentality and age demographic combined with the economic stress levels that are a truly a sign of the times.
Instead of saying how honest or hard we work to earn your business, make the customer say it as a response to your message. Say something revealing and the audience automatically says to themselves “Uhmmm, that seemed honest.” Like when I said radio was my pitch for today. I was honest and I told you straight up. What today’s market is all about is demonstrating a real way of being in the world. It’s a big shift, but it’s genuine. Most dealers that I had the opportunity to speak to in 2005 probably wouldn’t recognize me today. That’s probably a good thing, hard to help someone when you’re talking at the pace of a chipmunk on Rock Star. Find a way to be real. Replace first person testimonials with advertising that depicts one person talking to another about whatever your message is.
Here’s a big one… Confess a fault. The influence of the baby boomers has been replaced with a young nation subscribing to the idea of humility and keeping it real. In the 90’s alternative rock replaced the hair bands of the 80’s because musicians we’re getting tired of having to be overly technical instrumentalists armed with hairspray and big budget videos. It caused rebellion. Today people are taking the same stance towards both the work place and their personal lives. Dressing down is more “in” than ever. The framed success posters (including mine) of the 90’s containing those witty one liners are slowly being replaced by images that remind us that we’re not perfect yet in a way give us hope that we can do better. So play to it not against it.
Examples of effective messages
Phrases like “Live Big-Drive Small”, while I really like them, would do even better if one day replaced with lines like “Live Real-Drive Right”. Use your alter ego (as described above) to proclaim a message, hinting at a fault or realness like “Your car is really just another tool that provides a function.” What’s important to keep in mind is what having the right tool for the job can accomplish. Another example would be… We realize that the year, make, model and color of the car you drive is really just a symbol. What’s important to remember is what it symbolizes. So when you’re ready to get approved for a better vehicle at a lower payment than would otherwise be possible, http://www.NewEnglandCarCredit.com will have your new ride waiting for you. So message first, advertising medium second.
Attracting better bruised credit customers to the showroom
There are two critical components to increasing the credit score on the showroom floor. One is what you say on the phone. That’s a different article. In advertising, the idea is to create an image that people with newly afflicted bruised credit can identify with. People with newly or mildly bruised credit typically don’t label themselves as such and as a result, rarely respond to the typical bad credit message. What usually happens is they get told no enough to finally take it to heart. Then, and only then, will they respond. Unfortunately there is a 70% chance that someone else turned them into a deal first. Your goal is to get them to respond to an emotional message from you before that can happen. They hit one dealer, get blown out, drive home, get on the Internet and come see you straight away. That’s the only way you’ll ever increase the response rate from better bruised credit prospects in any number that makes a difference.
There are 5 ways to accomplish this that I really like. The first four would take too much space in this article, so we’ll skip to the 5th. Incorporate a good credit message with a bruised credit hook. Now (this is important) that doesn’t mean to run a “zero down” ad and tag it with “good credit, bad credit, no credit, no problem”. That doesn’t convince. Instead, run with a script where, for example, Bob with bad credit gets sent to your alter ego website by Julie, the credit union manager after pulling Bob aside to confess that your alter ego is where she went with her perfect credit to get the best vehicle at the lowest possible payment for herself. Now you have bad credit and credit union members playing in the same sandbox, which is a powerful yet, unassuming message that will work.
The results
Incorporate these concepts well and you’ll be surprised at the credit scores in the 600’s that walk through your front door. Now go pick a rope and climb it and have a successful 4th qtr 2008. This story was originally written for World of Special Finance Magazine’s January edition, however we felt whatever insight it might provide would be better served now than in 2009. So please reply with your feedback, time willing. Good selling.
Eddie Coleman
C.E.O Hyperdrive Systems Inc, -Technologies, Media, Mastery Council
eddie@hyperdrivetech.com
503.227.3515 ext 107
877.87.HYPER