Success of a Sub-prime Department

Raul Vazquez

I can sit here and tell you that it is important to hire the right people, buy the right cars at the right price, and use the right lenders. I can, but I won’t because that is common sense. If you have made your way to read this article, you should know how to do all of this.

When I first started working with dealers, I figured my only job would be to generate leads. This is my specialty. Soon I realized, however, that generating leads was not enough. My assumption that car dealers knew how to sell cars has proven to be wrong. So, while yes, it is important to generate leads, it is equally important to know how to get people through the door and to know the programs of your lenders like the back of your hand.

The ideal sub-prime department generates hundreds if not thousands of leads from many sources and they understand that it is a numbers game. Not all leads become a car sale. In fact, most of them do not. A lead is simply an opportunity to sell a car to someone who has expressed an interest in buying a car. I will say that a lead is generally better than advertising in that you know what you are getting in advance, thus limiting

Paying for leads, either through advertising or through a third-party service, is the easiest and most consistent way to generate leads. It also costs money. An often-overlooked method of generating leads is referrals. Your database of customers and leads is a virtually untapped resource of new and free leads. A dealer that is good at working referrals can generate as much as a third of their sales this way. It is hard work but the ROI on referrals is 100 percent. That return is hard to beat.

All that said, you could generate thousands of leads a month and none of that will matter if you cannot get them into the store. You will not sell many cars over the phone. I find this to be the trickiest part of operating a sub-prime department. It is the trickiest because dealers run a retail operation and by definition, retail businesses wait for customers to come to them. Calling people on the phone and setting appointments for them to come in is not a normal part of the process. A new process translates into a process that needs to be learned. How do you develop this process? It all starts with you realizing that this is a department within your dealership, the same way as any department. Many dealers want their leads called by salespeople. This is as effective as having your receptionist service cars. Once you start seeing it this way, you will become more successful almost immediately.

The third key is to know the programs being offered by your lenders and making sure that you have a relationship with your lenders. I agreed that this seems like common sense. That is, until I heard this story. One of our sales staff was talking to a lender that wanted our help getting them into a dealership. When he called the dealer to help out, the dealer thought that the lender was already a vendor. Now you tell me how this even happens? What if they really were a lender they were using? How much of the program do you think that special finance manager knew and how many loans could he have possibly sent their way? The sad reality is that most special finance personnel know the programs of an average of three lenders. If you don’t believe me, look at their numbers. Or better yet, look at yours. Do your top three lenders represent more than 80 percent of your loans? The more you know about the programs of your lenders, the better your chance is of selling cars. This is your job.

In conclusion, the auto business is not any easy place to be right now. The sub-prime survivors will be the ones that are the best at doing the things I talk about here. I wish I could tell you that you will somehow magically generate sub-prime business, but you won’t. It will require that you work harder for it than everybody else. Do that and be good at generating leads, setting appointments, and working with lenders and you will succeed.

Raul Vazquez is the CEO of Focus, Inc., an advertising agency that specializes in direct response television advertising (short form and infomercials) for auto dealerships. Contact this writer