#382 - Level Up Your Sales Game

I think having those affordable cars brings people into the lot.

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 this episode of the Independent Dealer Podcast, brought to you by Buckeye Dealership Consulting. Luke, you're looking good. Looking well rested.

On it, baby.

Back from vacation? Feeling good?

Yeah, glad to be back. Glad to be in the office getting things done. Weather's perfect. A lot of golf last week, Jeff. A lot of work, too, but, you know, doing what I can.

Yeah, we hit the dog days of summer here pretty soon. I mean, I look at my travel schedule with family trips and Niada and everything else going on, and it is basically crazy. So I don't have a whole lot of hope for the next couple of months as far as me staying focused or knocking on any big tasks.

Oh, okay. I, you know, I've got a couple big tasks from consulting and. And other things that I'm kind of doing right now that are focusing these. So I'm trying to. We're going to be in Vegas, I guess. What, for Niada? Yeah, a little bit. Not too long from now, two weeks from now, three weeks from now, Whatever it is. I got to get a bunch of stuff done between now and then.

Yeah, I. I've been working on some accounting things that will come out in future episodes to look at taking these days and this little bit of a slow time to really dig into my numbers. You know, we talk about things being tough out there, and sometimes you don't realize it because you're like, oh, I'm swimming along great. But what you didn't know is. And what I found out is that I've been. Everything has crept in the wrong direction. You know, it's a cut. This has dropped a little. This has increased a little bit, and now all of a sudden, my net profit is just freaking dried up.

So, yeah, it can happen really easy. And so many dealers focus on cash flow and they go, oh, I got money in the bank. I'm making money. That's not. It's not the best way to look at it.

Yeah. Especially if you're a buy here, pay here, because you can have cash in the bank as a buy here, pay here. And that's only because you're cannibalizing.

That's right.

Yourself. So you kind of look at the whole balance sheet along with that.

Yeah.

One of the big things I struggle with is, is I've got my team on a goal this year to. To get to the Next level of sales. You know, we typically hang out right in the kind of 30 to 40, 40 to 50 maybe. But 50 needs to be like our new platform. Like that needs to be our minimum. And I've got it set up to do 25. Buy here, pay here is. And another 25 retail, because I'm. I've got the hybrid model here. Getting to that next level and breaking through to say making 50 sales like your standard is really hard for dealers. When you get. Sometimes it's like, hey, we always sell 10, we always sell 15 every month. But how do I get to that next level of selling 20 or 30? Or if you're 100 car dealer, how do you go from 100 to 150? You know, getting to that next level is really, really hard.

Yeah, I think. And, and everybody's level is different. Like you're pointing out that 15 car dealer is like, man, if I can just get to 20 right? Or 25. And that five car dealer just wants to get to 10.

Yeah.

But I see a lot of people in this 25 range, Jeff, that needs to get to 40. That is the one thing I get called about more than anything when it comes to other dealers want me to help is that is that junk. And maybe that's cause a lot of us sit in that area. But that is to me, the hardest jump.

Yeah, it is. Because I think it takes. You go from being kind of like just your basic, my door is open and I got cars on the lot. You know, whether I have 20 cars sitting out front, I can sell 20. If I've got 60 cars sitting out front, I may only sell 20. Right. Because there's, there's so much manpower. So let's go through that and let's really dive into getting to the next level. This was prompted by a Facebook post from a fellow dealer. And we'll keep all the names anonymous, but their basic gist was, hey, I'm at 12 cars a month. I want to get to 20. I'm in a small town, I do only buy here, pay here. How do I get to that next level? And what I want to do with you, Luke, is let's go through some of the ideas that other dealers recommended. Because a lot of us know, hey, getting ideas from other dealers that have been there are great. And then we can throw in some of our own to maybe help spur everyone listening and myself to really look at what is the hold up? Where is the restriction in my sales funnel or where is my inefficiencies at where's the problem. Like, what do I need to focus on to get to that next level of sales?

Let's do it.

So first one, one of the dealers mentioned, I don't know, maybe which way to do these in order of uniqueness. So one of them mentioned adding it bdc, maybe an offshore bdc, which I guess the philosophy is, if you look at the bigger picture, is hire or train a professional lead handler.

You're only selling 12 cars a month. You don't need a professional lead handler. I, I can tell you that right up front. That's, that's not a problem. My question to this dealer is, do you have a dedicated salesperson would be number one, you know, because we don't know that that answer. If they have a dedicated salesperson and all they're selling is 12 cars a month, well, they're not a real salesperson. So you need to get a better salesperson or train that salesperson. You have better. That. That's really. The BDC aspect is for a company that's handling a lot of leads, and I can tell you who's selling 12 cars a month, they're not handling a lot of leads. It. They may be handling. Let's, let's call it. They're handling. Just quick math. Less than 100. Less than 100 leads a month.

Oh, yeah, yeah. Way less than that.

Probably 80 league. Probably 60 to 80 leads a month.

Yeah.

And so that's, that's three leads a day. If you, if your salesperson doesn't know how to handle properly. Three leads a day. You don't have a, you don't have a lead handling problem. Well, I'm sorry, let me back up. You. You have a lead handling problem, but it's, it's not because there's too many of them. It's because the person handling the leads just isn't doing their job.

Yeah. And that would be the bigger picture, I think when you say handle a bdc, what you're saying is find someone who knows how to handle leads and. Or train your person on how to handle leads. Now, like you said, we work into this backwards and we say, okay, what's the standard? What should a salesman be selling every month? A little of it's based on your model, based on your demographic. I get it. Historically, how many leads can they handle? How many can they close? How many are you getting in? What's the application to delivery ratio like, looking at all those metrics really matter? Because then you can hone in on. Okay, does, does this salesman just not know what they're doing? Are they blowing people out? Are you struggling? Once you have those metrics, then the rest of these ideas can come into play.

Yeah, for sure. You know, small rural business. All this is going to be. There's so much to dig into just to go, oh, you need a bdc? I think so. A bad way to look at it.

Yeah. So I look at it like sales training for my team. This morning I looked at leads. How many leads did you take? How many leads did you create yourself? How many Internet, Internet created leads did you handle? And then what's your scoring ratio in neo? How many of those leads did you score? How many appointments did you set? How many shows? Like, and then I can go to my guys and say, that's great. Now let's look at the beginning. These sucked because your texts were down and your phone calls were down. Right. You're not texting and making enough phone calls. You're not prospecting enough to sell a car every day. So you're not selling a car every day. You're selling a car once or twice a week. That's just not acceptable.

Yeah. Every and every car you sell, there's, there's an opportunity to, to introduce your referral program and to also ask those people for, for leads. So there's so much that you can do. People just don't do.

My repeat and referral is the worst. It's ever been worse. My referral checks, we, we pay, we pay for referrals. Right. To our current customer base. Yeah, I think I maybe cut two referral checks last month. Like that's the lowest it's ever been. So that's one other thing. One of them they mentioned was when you talk about your leads and things like that. Now let's look at the advertising side of it. And he said, Jim, this was Jim, he says, define your avatar. Like who is your customer? And if you're buy here, pay here, that's a little bit easier because you can say, great, based on my location, my demographic, my income, my whatever, who is my ideal customer? And then how do I reach that customer? How do I get in front of them? Where are they at?

I think, I think advertising is probably a big problem at this dealership. If I had to guess, that would be the first place I would go to. Either either not get enough leads or they're not handling the leads they got. Right. And being in a rural market, you can dominate your area. And knowing who your customer is is the first portion of that marketing. As soon as you know that in a rural market, you can dominate immediately. Billboards. I know people out there are gonna say billboards, billboards in the buy here, pay here space are super important. And the reason is this is because buy here, pay here is about branding. Marketing is about branding. It's about who you are, who you serve, and why they should buy from you because of that. And so you can. You can establish that through older means of advertising instead of the. The new, you know, digital portion of advertising. So rule space, you can dominate it, and you don't have to spend a lot of money to do it. Hey, guys, just want to remind you, Blitzpay is a super important portion of our buy your pay year business. We're still collecting from everybody. Right. And the one thing I can, I can. I never have to worry about Blitzpay going down now. My dms, I have to worry about that, Jeff. But Blitzpay is always there, and it helps us. Even in times when our DMS goes down, I can get on the phone with them, figure out what's going on, and they are. They're always there to help.

Yep. Get the guys and girls over at Blitzpay on the phone and talk to them about your processing. Now's the time. It took me a solid almost two years to transition over from my previous processor that I was in contract. But officially last week, they are completely cut off. I'm done. I have one credit card processor. It's pretty awesome. So give the folks at Blitz play a call.

Yeah. And that's a good reminder to a lot of people there's a certain. There's a certain processor that's kind of sunsetting on a certain dms. And Blitzpay is there to help. They integrate with the dms. Know what I'm talking about? Everybody should know what that is, and they're there to help. And they can take it on and take it on quickly. So make sure you give those folks a call.

One thing that Jim brought up was feeling like Facebook was dying and that maybe your ad money is better spent on a platform like Tik Tok that has a growing user base or time on platform.

You know.

Every.

People, dealers have been saying Facebook is dying for five or five years. Right. Facebook's not dying, but it might be how you're marketing your Facebook ad. Right. If you're. If you're buying your pay here and all you're doing is posting your cars to Facebook Marketplace, you're not going to sell your cars. That's. That's not going to happen if you're producing ads that are content relevant, which would be reels and. And maybe TikTok videos or Facebook or YouTube shorts, whatever. Get your message across. It's not about the car. We understand it by your pay, your space. It's about the dealership and about how you can help a customer. And so digital is not dying. It's just. You're just not doing it right. Maybe.

Yeah. Yeah. Definitely have to look at your message. And I think a lot of the successful dealers that we talk to that are in the space. Absolutely. Still love Facebook and still use it and spend a ton of money there boosting very specific ads that are tailored to advertising their program. Right. It's still about quick, easy, fast approvals, low down payments. Your job is your credit. There's still a group of the people that need that. One of the. One of the dealers mentioned actually lowering your down payment requirements and saying, hey, maybe you just need to look at a stable customer that can make the payment and not be so caught up on thinking you need a set down payment.

That was a. That was a problem with our. Our lack of sales 10 years ago. Our down payments were too high, our charge off rate was too low, and it doesn't allow you to grow. And I was talking to chuck Bonanno at a 20 group, and I said, chuck, how. How can I get to a thousand accounts? It was my goal. How do you get to a thousand accounts, Luke? You got to sell 42 cars a month to get to a thousand accounts by your beta. Okay, well, I can't find enough people with eighteen hundred dollars down to get to 42 cars sold a month. Right. Well, how do you adjust that? Right, Jeff? You lower your down payment, but what do you got to make sure is when you lower that down payment, it doesn't increase your charge off rate too much. It can go up a little bit. But if it goes up dramatically, then you, you know, the yin and the yang didn't match. And so, yeah, the yin and yang have to match here. Yes. Lower your down payment now. We don't know this. This dealership may only take 500 down now. So do not decrease your down payment. But if they're a dealership, which I've been to a lot of lately, that are still demanding $2,000 down and they want to get the 40 cars, y', all, your charge off rates really low. Lower that down payment and you'll see that those sales go up immediately.

Yeah. And I have empathy for those that are either have loan covenants and and can't get funded the amount and would just take too much cash if they lowered their down payment. So there's a lot of math to do here to say if I lowered my down payment by my average down by 500 or a thousand, what is that going to do to my cash flow month after month? What's that going to do to my advance rate from my lender? So you definitely got to do the math. You don't want to just shoot this willy nilly because that is a sure way to have a cash crunch.

Yeah, well what you can do though, you can look at your expenses because you may just, you may be able to cut some other expenses to, to level that out. And some people, some people are taking those big, you know, oh, I need 55 every time I take and you know, sell a car, you can reduce that, that can be reduced and you can cut some expenses somewhere else to level it out. And it may, you might could move, you might can move the lever by reducing your down payments by 300. You may not have to go a thousand dollars. So just again it's ying and yang. Figure out where, where the sweet spot is.

So another interesting thing and, and a couple of the comments were focused around inventory and what is your inventory mix? Yeah, a couple of interesting suggestions. One guy said you should stand out in front of your dealership and count the mix of car type, suv, sedan, truck and whatever that mix is, that's what your dealership should mirror. If it's 50% sedan, 25% truck and SUV, that's what you should be offering on your lot. Interesting theory.

Yeah, I don't know that I agree with that. I mean, that's okay, that would tell you something. But how do you know the people that are riding by aren't prime buyers driving Cadillac Escalades? Right.

So yeah, you don't know your dealership is between them, the upper class neighborhood and the downtown city, whereas your buyers are coming from, you know.

Yeah, I, I don't, I think inventory can always be a problem with sales. So I think this person might be on the right, right track here. Yeah, If I, if I'm selling 12 cars a month and I'm and I got 12 cars on my lot, the first thing I would tell you to do is put 20 cars on your lot and see what happens. Right. If all you have are buy here, pay here looking cars, ah, I would tell you to mix the inventory. You know, if you don't have any import cars, if you, all you have are Nissan, well let's let's stop import and Chevron and, and GM or Ford cars or Dodge cars, but Nissan's, if you, all you have are, you know, Nissan Altimas and central sitting out there, you got an inventory problem is what I would tell you. Right. But if you have some Chevrolets and some Fords and you know, some Hondas and some Toyotas and they're all sedans and I would say add a few cars or trucks and I add a few trucks in the mix or a few SUVs to mix and see if it, if it moves. Typically the, the reason for people with low sales is they have a lack of inventory. The mix it can, it can be adjusted pretty easily.

Yeah. And I would say that we talk a lot about the importance of the turn time and just I know in buy here pay here we don't care much about turn but obviously it's crucial in retail and I think it could be just as important in buy here pay here to say, you know, obviously no one wants that Buick enclave. It's been here for 365 days. I just need to get it out because what it's done is it's turned people blind to my car lot because when they drive by maybe I only have 15 cars and that same 10 cars have been here for the last 365 days. Yeah, they don't even think I'm in business because they don't see anything new, they don't see anything change. It's like that, that reg Dodge Dart has been parked out front for 12 months.

So yeah, yeah.

Making sure that hey man, you might just have to cut that sucker loose. And if it's an old body style Impala or an old body style, you know, car focus like those things were great 10 years ago but they're not anymore. And the problem with that is the acv. We have all crept up in ACV because we have been chasing a newer body style and frankly everything's just more expensive. So if I say no, I need to go down in ACV to get more sales because I need to make my cars more affordable. I can't put that much cash on the street. My customers got lower down payment. Now I'm going back to the old body style Impala and Buick and you know, Dodge Durango or something like where is the balance between hey, I need a five thousand dollar ACV and I need a car that is going to get eyeballs on it.

Where is that mix? That's what everybody's more important. I think you should definitely have some really good looking inventory out there because you can make up for lack of advertising by having the right inventory because people are going to drive by your lot. You can have both. I would say half my cars are, are the really good looking cars and maybe half of them are that lower acv. So I could switch the customers that come in on the good looking stuff to the older stuff. Now it's going to go back to, to a good salesman at that person at that point too. If, if you have a customer that only wants the, you know, the Tahoe and all they can afford is an older Buick enclave, then you're going to have to switch into that Buick enclave somehow. But you got to have a salesperson good enough to do it.

Yeah, the bay car, you know, we talk about that all the time. What's out on the point of your dealership, what's out front, you know, and are you able to make that switch because your process is right and your sales process is right with the customer that comes in all hot on that Tahoe and then, you know, you got to switch them over to a Buick enclave Acadia if you're even carrying them still.

It's, it's hard. That is the hardest part of Buy Here Pay Here is being getting customers to reality a lot of times.

Absolutely. It's even harder now. And that's to that point. Everybody comes in and they want to look at the nicest, shiniest car on your lot. They don't want the beat up car that's sitting in the back, that runs just fine. But it's an old body style and it's cosmetically bad. What do you think about having those cash cars on your lot like the $3,000 ACV? Maybe the AC doesn't work. Maybe the rear bumpers tore up, the paint's bad and the seats are chewed up. But it's a three thousand dollar car.

You know, we would, when we would take repos in and we deemed the repo not good enough to recycle. Yeah, but, but better than an auction car, if you know what I mean.

Yeah.

What do you do with it?

Right.

And I think having, I think having those affordable cars brings people into the lot. And what you'll find is a lot of times they come in with, let's say $3,000 or $5,000 to buy this car without payments. And they get there and they see the car and then you can move them up and so you can, you can get $3,000 down on a buy here pay your option we did, we did that a lot. But we also sold a lot of those lower price cars in our cash only section of our lot. And it, you know, three or four months, but it helps cash flow and it's also a hook.

Yeah. So yeah, I would rather sell that car. And, and it's like it's the opposite of the bait car. You know, it's like it's the other side of the bait car where yeah, they come in wanting a three thousand dollar car, they got cash, you upgrade them. Obviously there's some damage or something to watch out that it doesn't damage your brand. Because when you do sell a cash car as is, it still has your temp tag on it and they're rolling down the street thinking they bought something from you and it blows up three days later. That is the only battle that I struggle with on those cars is it's a headache because now you're dealing with a customer that's very picky, very particular, wants to take it for a drive, wants to run it to their mechanic, wants it to be perfect, but wants to pay three grand. And that happens all the time. And I beat my head against the wall and say just send it to the auction and get 500 bucks. This is not worth it. Of course, you guys know about Buckeye dealership consulting being the best place for your reinsurance, your cpi, all your additional products. It's pretty crucial when you talk about growing sales or growing your buy here pay your operation, that you're doing it in conjunction with your reinsurance company. Right. Because to stay profitable in these times, it's not only front end grosses and volume, but it's also getting the back end products and squirreling some of that money away in your reinsurance.

Yeah, you got to. And buy your pay, your space. You need cpi, you need gap coverage for your portfolio. And on the retail side you need the VSC products because without those VSC products, your grosses are small. You can increase that gross on the back end and really, really have some good numbers. Use it yourself. Don't farm it out to another warranty company.

Yep. Give the guys a Buckeye call.

Yeah, I mean, you know, it's whatever type of brand brain damage you want.

Yeah, yeah, yeah. The least amount possible sometimes.

No, I get it, I get it.

What else, what other advice would you have for a dealer like this that's trying to grow sales?

You got to take a look at yourself. You got to take a look at your website. You know, we, before we go to any place where we're going to do consulting. We do a deep dive on the Internet at people's websites and people's online reputations. And what you'll find is your website. You may think your website's fine, but I've looked at probably over the last year, a thousand dealer websites, right? And the website just doesn't match. And, and there's not enough cars on the website. And the, the pictures of, of the building, not of the, the people. It just doesn't match when people go there to go, well, am I buying from a building? Well, I can do that by buying from drive time. I can do that by buying from anywhere people want to buy from people. And so I think making sure your brand matches your, Your physical brand matches your. Your online brand is huge. Tracy Myers taught me that probably 15 years ago, and that's a big deal. So I would say do re. Do your, you know, do a research on yourself or hire me, and I'll do a research for you and report back what we find. But if you're, if you've got a problem, you got to start. You got to start there. You also have to investigate your employees. If you've got a salesperson that's been with you for 10 years and they've been selling 10 cars a month for 10 years, I can tell you how many cars are going to sell for the next 10 years. I mean, are they going to sell a month? Jeff? Yeah.

10.

10. So you got two choices. You fire that salesperson and hire someone who's going to sell 20 cars a month, or you keep that salesperson and you hire a really energetic, smart, young fireball, and they sell another 15 cars a month for you, and you keep that guy. And it may. It may help that guy, may not, but you have. You have a choice. And if you're the person selling all the cars and doing all. Everything else, which we've all been there, we, we may be the salesperson, we may be the buyer, we may be the recon guy, we may be the detailer. And if you are all for those people, and you might be the cfo, if you're the cfo, the CEO, the coo, the salesperson, and the marketing officer, you need a salesperson or you need someone else to help you. Because what happens is you sell a car on Monday, you go to the auction Tuesday, you bring it home Wednesday, you recon it Thursday, you put it on the lot Friday, and you sell it Monday, and you start that whole process over again. And what you've done, you Only sell one car so there's not enough time in the the day to get it done. So you may have to grow a little bit to sell cars.

Yeah. I think to your point about salesmen, if you've got the 10 car guy, don't bring in a guy to supplement it. Get rid of the 10 car guy because guarantee you he'll drag down the new energetic guy to be a 10 car guy.

Yeah.

And he's probably blowing out so many leads that he's costing you more than he's making. What do you think about third party listing sites? I mean, is that something I could look at to say, well, maybe I need to be on Cars.com and Car Gurus and Autotrader and all those.

If you're buying here, pay your store. No, don't waste your money. If you're a retail store, I don't think you have any choice.

You got to be there.

You got to be there. You got to be there. And you know, it depends on what's best in your area. I think Cargurus is probably the best site on the planet when it comes to this. I don't like them. I'm just telling you that customers flock to it and so I think you have to be there and then you can make a choice. I want to be able to carve accesses. Do I want to be on autotrader.com in cars.com? i think you've got to be maybe on two or three of those to really make it work. Buy your pay here it is. Brand, brand, brand. And if you're not advertising brand and if you're advertising cars and you're buy your pay here, you're doing it wrong. Just stop wasting money.

We talk about it all the time. If you're spending, you know, four grand a month or two grand a month with a third party listing site and you're a buy here, pay here customer dealership. You're better off taking that two to three grand and putting it towards goodwill and just saying I'm not going to give it to the Cars.com or CarGurus anymore. I'm going to put it to my service manager or I'm just going to spend it on customer goodwill. I guarantee you that'll get you more sales.

Yeah. Go out and sponsor baseball team. Go out and put a billboard up. Go out and spin it in your community. You're going to make way more back in the long run.

Yeah, definitely. Like you said, to the brand point. Brand, brand, brand. Cool. Anything else in closing?

Did we miss, you know, it's just hard being stuck in a spot for a while, Jeff.

Oh, yeah, I know.

And it's a mental reset that you kind of have to do. And it's hard. You need fresh eyes sometimes you need to take a step back. You need to go to conventions. We talk about that all the time. It's hard. Don't get frustrated. It's the summer. We get it. Sales slow down, but iron out everything when sales are slow.

Yeah. I want to mention something we didn't touch on real quick. Do you think that these guys who get stuck, do you think their salesman compensation plan is broken and maybe the salesman is set up to where if they sell 10amonth or 15amonth, they're making enough money, so why would they ever overachieve?

I think we didn't address that, but I do believe that everybody's sales plan is broken. Essentially, it's demotivating at times. Most of the time it's demotivating, not motivating people. People do get comfortable. And if you've got a salesperson making, you know, in a rural area making 6,000 or $7,000 a month selling 10 cars, they're fine. They're not going to sell anymore. So you got to investigate the sales plan. And actually the session I'm doing in at Niada this year, we dig into that a little bit and how pay plans can be demotivating and how you should build them to reward more than sales. And that's what you kind of have to do because if you're just rewarding sales, it's not going to work.

You know, it's interesting because I spoke with a dealer last week, one of our buddies that everyone at his dealership, I mean, I think he sells 150 or 200amonth now, and he's probably got 40 or 50 employees. Everyone has a pay plan, but a component of everyone's pay plan on the sales, on the, not on the, the portfolio side, but on the dealership side, it's all tied to sales. So everyone gets some sort of a bonus or pay structure built around how many cars. The dealership, sales, that salesman, it's front desk, it's lot porters, it's mechanics. Everyone is tied to sales. And I find that really interesting where sometimes, you know, my detailer is paid based on how many cars she gets cleaned. You know, my mechanic is paid on their flat rate and their billable hours, and my front desk girl's paid on the amount of cpi, you know, people we have enrolled. But if you just flip that around and said it's all about sales. I'm just going to bonus everyone based on a sales metric or a sales volume or a sales whatever. Kind of interesting because then everyone's rowing in the same direction. I think you're going for the same goal.

I think it will get you to your sales target month 1, 2, 3. I think it's super motivating on the on the front side. I think what happens over time that motivation dips and so I would, I would say that could sales amount of sales being a portion I think it should be a small portion of your pay plan is what I would say because it's very motivating to start with but if you. You go months without hitting it, it demotivates.

Yeah. Oh that's for sure. It's got to be realistic. That's for sure. Cool man. Okay Luke, good talking to you. Chat with you next week.

Yeah. See you, buddy.

Thank you for listening. Please leave us a review. We'll catch you in the next episode.

It.