Build a Successful Special Finance Department: Pt2
The DealerStrong Team Chronicles the Steps to Build a Successful Special Finance Department.
Second in a six-part series of articles. While the names and locations are being changed to protect the company’s privacy, this is the second of six articles documenting the process being used to build a successful Special Finance operation inside an already successful independent dealership, located on the fringe of one of the major metro markets in the United States. It will detail the plan, the strategies, the successes and the challenges encountered over a six month period, with the end goal of the new department reaching a monthly sales volume of 70 deals at over $230,000 total gross by the end of that period.
Special Finance Department Month One: The Launch
It was a Monday, the third day of the month. DealerStrong’s Executive Trainer, Shawn Foster, and I walked into Champion Motors full of anticipation and a tad bit of uncertainty. The anticipation was fueled from working with dealer-partners Clay Rodgers and Aaron Matthews for 30 days already as we were laying out the foundation for their successful Special Finance department. The uncertainty was from having never physically visited their dealership and having hired two new employees we had never met face-to-face, along with a couple individuals that were in the last stages of interviewing.
More uncertainty was established as Rodgers and Matthews had initiated a full-scale facilities remodel in the 20 days prior to us arriving to make room for the new Special Finance team, including building out a BDC (Business Development Center). I fully expected to find studs and roughed in electrical and was prepared to make the best of it. (Did I mention that Matthews was off for 11 days in Europe for his honeymoon during the construction time?)
Oh yeah, one last detail. In the days before we arrived, they had been scheduled to finish their ProMax installation. The trainer from ProMax walked in the door at the same time we did – meaning no one in the dealership, except for me, had a clue about how to use their CRM and desking system. Just a bit of uncertainty – but truly nothing life or death.
To our delight, all the new team members expected were present and accounted for. The new Special Finance director, who has 15+ years as an independent dealer in the same general market, had been working as a dealership consultant for the last three years. The positives: he certainly knew subprime and he also had been exposed to an assortment of technology and ideas in the stores he had been working with. He also had done quite a bit of training and team building, and with hiring a new staff with little expected retail auto experience, that was important. The biggest negative: he had not sat in a Special Finance director seat to speak of in at least three years, so there was more rust in his desking practices than what we might have wanted. Nonetheless, it was something we felt he could overcome.
Our sales staff were the hardest to hire from a distance. We began with one on “Opening Day” and with two more who required a later start date due to notice required with former employers. The good fortune was that we were able to bring in one new team member who had actually worked successful Special Finance deals from start to finish (albeit not in great volume).
A week later the new BDC team members arrived, and three out of three (we actually could have hired a fourth) were present and accounted for. We did lose one the first day, but we had expected attrition built in and as a result, it was not a significant setback. We quickly added a third BDR, who appears to be a significant upgrade.
Realizing that the first day of a new hire’s employment is the most important day in establishing the culture and easing their fears, we customized DealerStrong’s Onboarding Manual and had a much scripted day of welcoming/training, including presentations by both of the partners, various managers, ourselves and the dealer’s HR manager. It was followed by another two weeks of training to both make our team competent and confident ahead of our mid-month launch.
I must compliment Dwayne Bennett of ProMax who did a great job of orienting both the prime and the subprime staffs on their product, and thorough training as well. It is rare when I am onsite with a client during a CRM install. Even with the normal hiccups in setup that you naturally expect, it really went well.
Special Finance Companies
I had given Matthews a punch list of Special Finance companies and credit unions they needed to get signed up with in the month before we arrived. To his credit, he had accomplished far more than I imagined. As we started, we had nearly every finance company we needed, plus most of my “wish list.”
Fortunately, my own long term relationships with some of the top finance companies I have done a lot of training for helped us get their premium programs. As we started business, we weren’t going to lose any deals to any other dealer that had a better selection of finance companies. We will be adding a few additional niche finance companies, but we were certainly in a good place to get started.
Rodgers is the partner in charge of inventory and he really sunk his teeth in. As detailed last month, we were in a really good spot to begin with. Even though their 200 plus units in inventory had been sourced for prime credit luxury and highline customers, we quickly found nearly 20 units that made very good Special Finance vehicles from a cost and spread against the book standpoint. The bonus was they were not run of the mill off-rental units which made it very easy to present to aspiring subprime credit customers. Rodgers quickly caught on to what was needed for the bread-and-butter successful special finance inventory and immediately started using his connections to bring the needed stock to 30 units.
After nearly two weeks of orientation and training, the successful special finance department launched on the 13th. Bumps, sure. Stumbles, sure. But along with them came the smiles. The first car out the door was anything but the traditional Special Finance inventory. Availing ourselves of the Diamond status bestowed by Capital One, we sent a super sweet, seven-year-old BMW 5 series down the road to customers who traded in another vehicle that will be a perfect Tier 3 or T4 unit, and who, that same evening, gave us two outstanding reviews online. We patted ourselves on the back for exceeding benchmarks as well. Deal number two the next day was a three-year-old BMW X5, as a healthy down payment allowed us to reduce a customer’s payment to fit the required payment-to-income ratio.
As we go to press, the switch has been flipped for Focus leads. We are trying to hire one additional business development representative and are getting ready to shoot footage to use with our Nation’s Premier Auto Dealer direct response program, which will launch in about 30 days. Our conservative target stated last month was to get the facility built, staffed, BDC launched and sell five units, at above benchmark gross profits. Realistically we want 15. We certainly believe 30 by months end is doable. Now, all we have to do is make sure the successful special finance team has got their funding system ready to go. Time will tell, but so far, so good!