#311 - Ideas To Save Money At Your Dealership

This is the Independent Dealer Podcast, Education by Dealers for Dealers. Now here are your hosts, Luke Godwin and Jeff Watson.

Hello and welcome to the Independent Dealer Podcast, brought to you this week and most every week for the last few years by Buckeye Dealership Consulting. I've still got a little bit of sun. I've got a little bit of tan. I'm not sure if you can tell from the camera, but we had a great time last week down at our 20 group in Cabo. It was sunny, it was warm. I didn't want to leave.

Yeah, it was great. I, you know, I, I really enjoyed it, and I just glad to be around dealers that we've known and trusted for years and, and working through some issues that we're currently having. Because last year was not the best year we've ever had, Jeff, and we needed to make some changes. And sometimes hearing that from other dealers when they look at your numbers is reassuring. It makes you make decisions that, that, that can be hard and, and sometimes it's really hard to make decisions, even when you're, you're the boss and you're the owner and, you know, the decision needs to be made. Sometimes you need to be pushed off of the diving board, if you know what I mean.

Yeah, I think so much of us have kind of an inclination of what we want to change or do, and that's probably the one thing that does get me to leave these 20 group destinations is I just have such a long list of notes. I'm so excited to get back and put action at the dealership that I'm very motored to get back and just kind of like start picking these things off. And a lot of them, like you said, were things I knew I should do. But it just takes a reinsurance from a dealer that's done it the way that you've done it. What were something. What did you do, Luke, when you first came back? Give me a couple of your action items. What was on the top of your list? What did you tackle when you landed back in back home?

You know, we've talked about this. I've been trying to cut expenses on every aspect of my business and been doing that for really, the last quarter of last year, maybe the last half of last year. And it's funny, you just, you're sitting in 20 group and all of a sudden somebody comes up with, with a way they saved expenses and it's, you know, if you're using the same vendor, it may, it triggers, it goes, okay, well, let's, let's look at that bill real quick. So I just pull up the bill and look at it go, oh, well, why am I doing this? Well, I'm at. Automatically I asked my comptroller to call and our bill gets reduced 150amonth. And it, that doesn't seem like a lot, but that was something that was done because I was sitting at that meeting. Well, that's, you know, that's a lot of money at over five years. There's a lot of money over the next couple of years. You know, I did that. I, I made a decision to, to cut staff. That was a hard one.

That's not easy, especially when you're going into tax time. What, what, what was the catalyst there? Because I feel like it's the opposite. I feel like this time of year, I don't know how many people I have, we're all running around like chickens with our heads cut off.

Yeah. And so we had, we had staffed up for a projection to hit a certain sales amount in, in the third quarter. We had a good third quarter, but we were probably 10 units off of where I'd staffed up to. And I had to ask myself a serious question. Okay, you've got all this staff 1. Is your customer service any better than it was without the staff? And it was not. And honestly, it was probably worse than it was when I only had one or two people doing the same, same job and I had four people doing. So that's number one question we asked. Is it any better? No. Can we move someone in the dealership who, who is doing a portion of my job to that position and maybe me step back in and do a little more? And the answer to that was, yes, I can do that. So we decided to, to get rid of the, our, our service manager. He's been with us for a long time, and a guy I really liked, a guy who's been going to 20 groups with me for, for two years in the service 20 group. And it was one of those things where a really good guy, maybe I put him in a position he wasn't quite ready for. So maybe, maybe a little bit that's on me. But we kept seeing that, that parts weren't being returned properly. We discovered thousands and thousands of dollars in parts that had not been returned. And so not only did we see a savings on the, on the, the, the side of salaries we're going to see, should see, and a super savings on the side of parts.

Yeah.

And so I just think it. Making those hard decisions when, you know, everybody, you were sitting in the meeting and they're like, look, you, you got to get rid of some managers. And, and I did. And so that means I've got to work a little harder. Jeff.

Unfortunately, yeah, that's not fun at all. I don't, I don't like that one bit. But I do think I understand what you say when you say you have someone in a position and it's maybe someone you liked. And we talk about this when, if you guys study the EOS system, which we mentioned a lot of times, it's the gwc, right? Get it, want it and capable, you know, or competent or something like that.

Yeah.

Do they get it, do they want it? And are they competent of doing the job? And sometimes we might move someone from a position as like a lot porter, and they could be a rock star lot porter, and you move them into like a parts manager, and they just don't understand computers or they don't understand some things. And, and unfortunately, you kind of set them up for success. You thought you were moving them up the ladder, but maybe you moved them into a seat that they just did not comprehend they were not capable, or maybe they just didn't want it. It wasn't something they wanted to grow in, but they felt like to keep their job and to stay here, they had to take on this responsibility that maybe they weren't capable of.

And yeah, one thing you have to worry about when that happens. Did this guy want the job? 100%. He came to me when I'd hired him as a parts manager. It should have been a red flag when my parts weren't being managed properly. And I move him to service manager anyway. There are so many things that are blind spots to owners because a lot of times we've done all these things we've done, we've done every position that is there. Right? And so what happens is you, you go, okay, well, anybody can do this job because I did it. Not always the case. And, and when it comes to saving the company money, the one person that really cares about saving the company money is you. And so you make sure that parts are returned, you make sure that cores are returned, you make sure that every part that, that you order is used. And, and it's even with leads in your sales department. The, the best person to handle leads near sales department is you, because you know how much those leads cost. And so you just have to be mindful that when you put people in position that they may want it, but you've got to put, you've got to Put procedures in place to make sure that they understand the process and why it's important. And you also have to monitor that. And unfortunately, I wasn't monitoring it properly. And really, it was me.

Yeah, I went out after they got home and the same thing. My parts department is good. I need to tighten up the audit. I need to tighten up the accounting and make sure that every dollar is going to the right place and all my cores are getting returned. And so I'm out in the shop and I'm paying attention to stuff, and I look over at our tire department, and we've got four sets of takeoffs, right?

Yeah.

Tires that came off. And I'm like, oh, my goodness. So I go over and I look closer and yep, sure enough, one of the four was bad. And I had these two stacks of eight, you know, eight tires and one of each set. I was like, guys, you know, we don't have to replace all four just because one is worn down. Like, we can actually find a matching tire from ebay or even our parts supplier just replace that one tire. So. So that was a real come to Jesus moment for my staff where I was like, guys, this is. This is. This is absolutely insane. You know, the. Well, well, the tech, during the inspection, he said the tires were bad. Well, did you verify that? Like, why is the tech making decisions on the recon? We. He needs to tell you what's wrong. But you, you are the final decision on what gets ordered. So, yes, unless you inspect it, you don't know what's going on. One thing that I want to bring up, Luke, that was really interesting is we did an expense report on our processing. Right. And you guys will hear the episode we do with Robin of Blitzpay. She was there with us. And so we were going over all of our credit card statements. And you guys have a really unique thing. Your per dollar processed fee is like a tenth of what everyone else's is because of your unique model of the way you take payments and your convenience fee. Right?

Yeah. You know, Blitzpay has helped us a lot with this, Jeff. And what was. What was funny is people were complaining about my. My product, my convenience fee of 10.95. But what was funny is everybody was complaining about, yeah, it's so high. We're on monthly payments and everybody else is talking, well, mine's 4.95 and 5.95. It's like it's the same thing, right?

Yeah.

But we've layered ours and we've. We've gotten we direct customers to do it themselves through Blitzpay. And it's charged every time. We don't, we don't give them the, we don't give our collectors the option of clicking the button to not charge it. And I think what happens a lot of times in, in anybody's store is as soon as you get pushback from a customer, a collector or a cashier or whoever, they don't do the starts waving everybody's fees. That's right. And that's where the problem begins. We don't waive anybody's fee unless you get management approval. And there is a legitimate reason. So. And it's just with late fees too. And I don't know how many people out there do late fees, but you should never, ever waive a late fee unless there's a legitimate excuse. And those legitimate excuses could be, I came there at 5:30 and for some reason y' all are closed and I put it in the Dropbox. Okay. We can look at the camera, make sure we can do something like that. But for just a collector, a cashier to waive a fee, it should never happen. It shows favoritism and it does all things and it costs you a lot of money. Yeah, processing fees. And I've said this, I'll say it again. There's a lot of expenses in your dealership that are very expensive. One being personnel, two being advertising. And number three in the buy here, pay here space is processing fees. And you've got to get a handle on them. If you don't, they will freaking cost you tens of thousands, if not hundreds of thousand dollars a year.

Yeah. I do find your model really interesting of your payment. You know, you're not pushing to put everyone on auto pay. You're. You're actually pushing to not have people on autopay. But you use Blitzpay's automated text messages to just remind them like, hey, you could have been on autopay and save this convenience fee. Instead I'm going to send you a text message and now you're going to do a one time payment with a fee, which is saving me a ton of money. Right. If you put all those people on autopay, you would be paying for them because that's how a lot of us.

Yeah, you know, that's been a, that's been a, that's been something that so many collector trainers have trained over the years. Auto pay, auto pay, auto pay, auto pay. And, and I kept thinking, man, I got to get auto pay. I got to get auto pay. But then I started Running numbers. I'm like, number one, if we put somebody on auto pay, we always have to change it. So why are we doing it? You know, I heard a dealer a while back talk about, I've got 97 penetration Autobay. But you have, you know, 25 delinquency. Those two numbers don't, don't make sense to me. You can't have that type of penetration and have delinquency. It doesn't happen. What's happening is they're on auto pay, but they're not running. Every time they run it, it declines or whatever. So what's the point? Why be on autopay? I don't get me wrong, brother Tim would shoot me if he hears me telling dealers this, but I think there's a, there's a way to do it better. And like I said, I want my, I want every customer paying 11 days late. So I get late fee, inconvenience fee. It's just the way, I mean, that's my model, right?

Yeah, yeah. You know, it's interesting. So you talk about the, the, the late, you know, our expenses and keeping an eye on expenses. And you'd mentioned, you know, we've talked about this before, guys, right? Go to your QuickBooks, go to your accounting software, go to your bank statements and just make a list of every recurring payment that you see hit, right? Just make a list of every single vendor that you pay monthly or that you pay frequently. And then look at each of those dollars amount and go to your team and say, do we still need this? Are we still using these three different softwares? Did we, you know, are we getting an invoice? Do we know what's inside of that invoice and what we started to get charged for? Oh, my goodness. We're being charged for, you know, 15 mop heads. And we don't need 15 mop heads. Like, why are those being delivered? Like, you know, why are we still getting, you know, this charge for this booking tool in this one software, when actually we already have that for free in this other booking tool, right? So many vendors are crossing over in their features that you may be able to switch over and say, hey, you know, somebody like Neo, I'm going to go to you and add a website and let you guys run it now that you're doing websites. And I'm going to get away from my really expensive one that I'm using with this other vendor. I can, I can stack that feature onto an existing vendor and save a lot of money as opposed to having A standalone vendor for that feature.

Yeah, for sure. You know, I've been preaching expense saving. My goal is to, say, 10 to $12,000 a month compared to what I. What I had last year. And I think we're getting there. One thing we did was put one person in charge of all ordering, and that's my wife. If you need office Supply, it goes through her. You request it, we verify you need it, and then we can order it, and we find the best price out there before we order it. Expenses. I'm gonna tell everybody this. Expenses got out of whack during COVID because we were flush with cash, we were making tons of money. And what happens is when you stop making all that money, the easy money that we were making, your expenses don't come down. They just stay there. And if you don't have your eye on the ball and your finger on the pulse, whatever you want to call it, it goes crazy, which you're talking about. I had another. I had a $15 charge was being charged every month. $15 doesn't sound like a lot, but I had. I had this other software doing the same thing, but it's every little small thing, adds up to. To a big number. You've got to look at it, got to do your research.

Yeah. So the. The only issue in that, when I push back against some of these things, is knowing when you're cutting your own legs out from underneath yourself. Right. So I look at some of my largest expenses that, that are interesting to me. You know, obviously, some of my. My CRM, you know, my NEO bill is. Is very large. You know, my. My auto checks, you know, some of these things, it's like, man, if I cut that out and I just went back to doing it this way for free, I could save a lot of money over the year. You know, some of these big ones, my vincube, you know, car buying system that I use, you know, there's a handful of softwares and vendors that we both use that could I do without them, or am I hurting myself by going too far?

I've never, ever thought about leaving carfax. Never. And over the last two or three weeks, I could be pushed over the edge, right? Because I know I could switch to auto check, and it's going to save me a thousand dollars a month. Well, is it gonna. Is it gonna affect the amount of cars I sell? I don't know. But it may be a way I can play Auto Check and Carfax against each other and get a better rate. I don't know, I, I'm, I'm trying to save money everywhere.

Yeah, I hear you. What I've done is, you know, switching all of my reinsurance products over to Buckeye right now, guys. And it's been a, it's been an adventure, let's say, and we're still in the middle of it, so there's some learning curve and things are run different in the processing and I've got like five new logins for my whole team. So it's, it's a, it's a beast. And that's something I do need to remind myself in all fairness. Reinsurance cpi, when you put those two together, it is its own company. And I got to remember that, that it is, it's. You're setting up an entire company inside of your dealership because this, the money potential, the tax saving potential, and the additional income that you can create off CPI is literally a company like you could almost make an entire living just running a CPI and a reinsurance company inside of a dealership. Right.

Yeah. You know, and that was one of the, another big things. I, I went to 220 group looking at is, is CPI, Buckeye, of course, let's just stop and say, if you have not signed up, do it today. Get your reinsurance started. Even if you're just doing cpi, you're gonna, you're gonna make so much money. Don't even worry about it. But we have some of the best people in the industry with CPI in our, in our dealer group. Right. And so we're, we're newer to it, finally got it off the ground, got it rolling. But I had to have some processes in place. I had to figure out what everybody was doing, Jeff. And luckily, luckily we got some of the best there. And they're able to tell me what I'm doing wrong, what, how I'm looking at it wrong. And we have, we have essentially now just, we're writing it out. We're in the process of writing it out and getting those procedures down. I'm meeting every week with the people in charge of CPI to make sure we're getting the jobs done. So it's, it's all. Everything takes so much time. And like you said, it is a separate business.

Yeah. And if you want to get more education on that, guys, be sure you've signed up for Buy Here, Pay Here United. Obviously, Luke and I are going to be there. If you're in the Buy Here, Pay Here industry or have any interest in getting into Buy Here, Pay Here, this convention is one of the best, if not the best to be, to learn to, to get educated on stuff like CPI and reinsurance and talk to the professionals and talk to other dealers. April 23rd through the 25th, it's at the Bellagio, rates are great, hotels are great. It's a great time to be in Vegas. So make sure you've got signed up. It's coming up right around the corner. Luke and I will be doing a wrap up at the end of each day, question and answer, kind of connecting the dots for dealers and just helping kind of have a recap and a hot topics conversation. So it definitely, definitely worth being at.

And I know there'll be a lot of CPI talk. I was talking with Sean trying to, you know, get this, help him with some areas. I think that, that dealers have a little blind spot in and so come out there, figure out how to set up another company.

Yeah, yeah, exactly. Well, the reason we talk about that is because we need those revenue sources. A B B full coverage insurance is becoming insanely expensive. I cannot tell you how many times I see a news article that says customers, dealers, used drivers are being priced out of the full coverage market in so many areas because it's just gotten astronomical. So yes, it is a cost saving for our customers. We can make the numbers work just like the big guys do. So that's my plan. I added a second tier to my CPI program because of the dollar and the exposure. But I'm working out now of how to just really push that out there because I think we need to find those revenue sources to stay afloat when things become more expensive and things slow down. I mean, obviously you guys, we all know the news. Yeah. Dealerships going under, right?

Yeah. Or to buy the stuff we're used to buying.

Yeah. Carvana shut down. Was it, Was it Carvana or was it no room? Oh, oh, not yet. Okay. Shut down. I don't know if you guys heard that news. So they're done the driveway. Did that close a while ago too or something?

I saw, I saw something about that which we didn't have any of those.

Around us, you know, so Sonic Auto, they shut down all their used car locations for whatever reason.

Was that Echo Park? Is that what that was?

No, no, this is recently. So you've got a lot of these and we know a handful of, you know, kind of used car groups that are maybe struggling right now with the cost of credit and credit lines not being extended or, or renewed. Let's say it's, it is definitely a time to be dotting your eyes and crossing your T's and keeping track and, and maybe getting a little more conservative. And I say that at the same time as I'm looking at my bank account and I'm like, I'm digging underneath the couch to get pennies. I'm like out in the detail bay. Like, I'm getting all the quarters and pennies they pulled out of repos and I'm taking them to the bank because I need every dollar in there. Because it all hits right now, right? We're stocking up for tax time. We've got, you know, payroll and tax burden and everything else. You're selling more cars. It is a real cash crunch.

But yeah, the scary it is, you know, back to the auto insurance thing. It's a 47 year high inflation auto insurance, Jeff. 24% increase.

And, and back 47 years ago, they were driving like buggies and cars, you know, horses and things like that.

Anyway. Yeah, I mean, everything's more expensive, so I don't know what to do except for, you know, farm CPI as much as we can.

Yeah. The other plug I'd say, guys, is, is getting that cash in. It's all about cash flow, right. So Tax Max, we use it.

We did a deal.

Yeah. To try to get as much money in as we can as soon as we can. Right now I have done to date, I'm at 11 tax deals, so kind of. Okay, probably five or six of those are actual filings. With W2s in hand, I've got about $30,000 in tax money that I've either received or will receive over the next couple of weeks. So that helps a lot. Right. When you're talking about pinching pennies and looking under things to get quarters, getting that tax money in sooner has really helped for me to go out and pick up a couple more cars to have ready for for the rest of the tax season. So, yeah, call tax Max today. You can still get signed up. People have their W2s in hand. Use the code VIP to get 40 off the VIP package for podcast listeners.

Yeah, yeah. You know, it's funny, I didn't have a lot of buy in from sales staff and then all of a sudden we've done two or three in the last two days. And like, man, this thing's great. So, you know, sometimes it just takes a little twist of the arm to make sure they, they get involved and do what they're supposed to do.

Yeah. To me, and I know we have different philosophies, but a lot of it is about the incentives. Right. So for down payments, you know, people at my dealership are incentivized to get larger down payments. And these qualify. Right. Once. Once the tax money's received, they will get bonused on that additional down payment. So they're always pushing it. Right. Our salesmen are like, hey, you know, we got to get you qualified for this car. You're going to need to use some of your tax money to get into this. Right. So I try to get my incentives lined up with my salesman incentives in order to get these things to happen a little bit faster, a little bit sooner, a little quicker adoption. You know, they're very, very much more willing to jump through the hoops of filing someone's tax return when it means they're going to get an extra, you know, 100 or $200 on a sale.

Well, and there. And honestly, there's no hoops. This thing's so easy with tax max. It's. It's simple.

Yeah, yeah. You might have to send out the code. You might have to hold customer's hand a little bit through the process, or you might have to punch in the numbers yourself if they're sitting at your dealership and they've got your W2 in hand. So, yeah, there's a. There's a lot. A lot of different options. Luke, to wrap this conversation up, what final action items do you have or what are you putting into your dealership to make sure your staff is trained right and. And up to speed?

Yeah. So I went to this. To this training workshop up in Chicago the first week of January, and it's called Train to Trainer, and it's a Joe Birdie thing. And Marshall and I were up there. Marshall brought two of his. Two of his managers. And when times start to get a little harder, you got to train harder. You know, it's. It's just like. It's just like football, right? You. The further you get into the playoffs, the harder these guys work during the. During the off season, the hard these guys work during practice season. And so we were. I was learning to be a better trainer. I'm a good talker, right. But I'm not good at training as well as. As I could. Not good at training my staff as well as I could. So we went up there, we spent two whole days. All we did was train, train, train. We got up in front of other. Other managers, other dealers, and learned to train. I mean, it was hard. So one of the things that they would ask is, how many times a week do you train and we're like, yeah, what, what's week? And it's like, that's not enough. You need to be training two to three times a week.

Wow.

So we, we've instituted our sales staff is trained Tuesday, Thursdays. Now those are our. And we're on our lightest day days of the week. Those are our lightest days of the week. We start at 9 o', clock, we trained at 9:30. And we're going back to the basics. We're starting on greetings, we're doing either or questions, we're doing closing, we're doing bypasses, we're doing all these things and we're going to stay on it. We're going to stay on it and we're going to get better. The difference in just a week and a half of training is immense. It's amazing how much these sales people absorb by just sitting here doing role playing. We are, we're going to be on a different level in six months, I can tell you that. It's going to be amazing. So train, train, train.

I think. And you probably did this at your, at your training, right? It's dealers and those that don't in it or haven't been around it. You've got to remember the difference between talking and training, between talking and role playing and role playing is such a weird word and I get it, you hate it, your salesmen hate it. It's awkward, it's weird. It's role playing. If you're not doing word tracking and role playing, you're not training, you're just talking, you're just having another meeting. If you just sit there and berade your salesman with what they should be doing and what they should be saying. And so unless you're having a back and forth role play, you're not training.

And it's every single one of your sales people and your sales manager. It's not just the one who you think does a good job with you, right? It's the one who doesn't do a good job with you that you really need to focus on. They are saying whatever they want to say to your customers that you paid $40 and $80 to get to your dealership or $40 to get on the phone. Make sure they are saying what is appropriate and make sure they are saying what is going to set an appointment and what is going to get an application filled out. That is all that matters.

Yeah. It's so interesting that like even when I do role play now, we unfortunately only do it one day a week, Friday mornings We definitely need to do it more because as I sit there and I say, okay, guys, two weeks ago, we talked about, you know, maybe the EV tax credit or we talked about the tax max program. Okay? Now I'm the customer, you're the salesman. Ring, ring, ring. And it's just like deer in the headlights, or it's like complete off the rails.

I'm like, what happened?

Like, we trained on this a week ago or two weeks ago, and yet it's already gone. It's already completely gone. It's out of the repertoire. They don't have it. So if you think that they've got it figured out because you told them once, they don't have it figured out. Not the way it works, right? It's got to be continual because you're untraining bad habits and trying to train good habits. And guess what? Even when they can do it right in front of you because they've done it 15 times, the second they step out on the lot, it's all gone, right?

It's got to be muscle memory.

It's got to get to the point where it's muscle memory. Look at these professional football players. They practice these plays. They throw footballs a thousand times during the week, and they get on the field when the pressure's on and they go completely off the rails, right? So it happens to everybody. You. We've got to just stay on it and keep pushing it. That's really, really good advice. Anything in closing, Luke, Any other notes from your 20 group that you felt like you're putting into play?

You know, it's for me, and I've been harking on this over and over again. It's. It's policies and procedures in every aspect of your business, and that's it. There's some of my big ones.

One of my big ones was the accuracy of my composite numbers. I've always tried to be so accurate. This is so much easier now that I'm in your group. And we've got some semi integration with my dms, so half the numbers are already in there, whether they're completely accurate or not. At least they're consistent from what my DMS pumps in. But now I can spend more time fine tuning it, right? And I can look at all those little numbers that I used to not want to pull because it was such a hassle. Now I can take the time to pull them. And then when you look at it and you have a quarter or you have six months or like our meeting, we had a full year of 2023. This composite right here that we got from that meeting will stay on my desk for the next six months. Right. I'm looking at this. I'm. I'm fine tuning the numbers. I'm constantly getting into it to see where I am compared to what benchmark is and how I get those corrected. Because yeah, you look at some dealers in here and you and I had this conversation by text message. Some of these dealers CRR collateral recovery rate would have me not sleeping at night. Yeah, I would not sleep if my CRR was like this and my cash and deal was where they are. In my opinion. I think they're going backwards. If your CRR is lower than your cash in deal, you are giving money out, you might as well stop doing loans because you're losing money on every loan. It's going to quick, you put you bankrupt.

Unless, unless you have other businesses that are, that are making you more money.

You know, unless you have an insane service department and an insane CPI penetration. Maybe.

But I think there's, I think there's some dealers in business just to be cpi.

I think there's a good argument for that. We talked about that. You could literally just be in business to put money into your reassurance company and do CPI and the whole dealership operation is a break even. Yeah, it could be. And to be honest with you, with the way our margins are going, we may all get to that point.

You know, some, some last things. There's been a lot of different trading things going on in our business, Jeff. The value of a composite cannot be minimalized. If you're spending, if you're spending money to be in a group that does not have good composite data or if you're in a group and composite data is not being done properly, high priority. If it's not a high priority and if other dealers are in your group and it's not a high priority for them to get it right, you got some problems. The only way to get better in 20 groups is to know your numbers. And the other dealers in the room need to know their numbers and those numbers have to be in the data and they have to be available to you at all times. Only way you're going to get better.

Yeah, absolutely. Luke, that's a good note to end on. Talk to you next week.

All right, buddy, thank you for listening. Please leave us a review. We'll catch you in the next episode.