Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
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SPECI A L FIN A NCE By Greg Goebel PROCESS BREAKDOWN Is your special fnance process punishing salespeople for sticking with the plan? The special fnance guru says having the right compensation plan is the only way to right the ship. ©ISTOCKPHOTO.COM/DAVID_REY Set ting up Setting u a process to t n s handle subprime customs s ers is no easy task. It takes r u a ser ious commitment, and serious that comm a commitment starts with m that com m e dealer e e the dealer and extends all the way throu a through the store. But way thro t not even c commitment will be enough for the long haul. Commitment to the process tends to wane due to two main causes: The f rst is a growing stack of contracts in transit, an issue I tackled in last month's issue. The second is a compensation plan that creates winners and losers among the staff. More often than not, the "loser" is an experienced salesperson or F&I; manager who is being underpaid for working subprime deals. That discourages the sales team from sending customers to the special fnance desk, causing the fnance offce to try to wedge them into a prime structure. I am loath to tell dealers to change their compensation plans. I know how precious those plans are to their staff and how demoralizing it can be to suddenly be asked to play by a new set of rules. That's why it's so important to have the right one in place to begin with. But if the existing plan is unworkable, you must be willing to change it. With that said, let's take a look at four potential sources of confict between prime and subprime: 1. PLAYING THE NUMBERS GAME Many dealers who are new to An 18-year former dealer principal who has been focused on special finance since 1989, Greg Goebel is the CEO of Used Car University LLC. He serves as an industry consultant, trainer, author and speaker, and has taught his special finance win-win-win strategy to more dealers, vendors and finance companies than any other trainer. GoebelG@AutoDealerMonthly.com 26 AUTO DE ALE R MONTHLY • M AY 2013 subprime will decree that any customer with a "low" credit score must be sent to the special f nance manager. This approach is problematic for several reasons. First, where exactly do you draw the line? There's no magic number that divides prime from subprime. A Chevrolet dealer might say any score below 450 is special f nance. The Jaguar dealer next door might put the cutoff at 700. Second, even if there was a clear dividing line, it wouldn't help you decide how to work the deal. Credit scores don't get deals bought; it's all the other factors that make up each customer's profle that determine their creditworthiness. Finally, if the prime fnance manager thinks he can get the deal bought, he's going to work it to death. He will pull multiple bureaus to fnd the highest score. He won't structure it properly, and he will push the funder's patience to the breaking point. A week later, he'll be no closer to getting the deal done. And that's not necessarily his fault. Read on to see what I mean. 2. RIGHT MANAGER, WRONG DEPARTMENT Another common mistake is to take a talented F&I; manager — and his or her compensation plan — and put