Credit Mail Experts
Oh, how the times have changed — especially for the buy-here, pay-here dealer. To compete in this new market, you need to change your methods of marketing and your processes to attract new customers to your dealership.
One of the best descriptions I ever heard of the BHPH business compared it to a pendulum on a clock swinging back and forth. The pendulum is either all the way to the right in favor of BHPH, all the way to the left in favor of special finance, or somewhere in between. During the Great Recession, there were a few years when the pendulum was all the way to the right and the only chance of a consumer with subprime credit getting a vehicle was with the help of a BHPH dealership. As we all know, it’s a different story today!
It wasn’t long ago that people with credit scores in the high 500s and even the low 600s were coming to BHPH dealers for help. But now that special finance is going strong again, the number of those “cream of the crop” customers has greatly diminished. If you’ve read my previous articles you have seen that the percentage of the population that will use a BHPH dealer is relatively small. Well, right now, it’s a little smaller. It’s almost impossible to hit such a small target with mass media advertising.
So what do you do?
First you need to take an honest look at the credit attributes and demographics of the deals you are putting together today. Not what you were getting a couple of years ago — those days are gone (for now). What are their credit scores? What is their income? What is their age? You will likely find that it’s hard to put all of them in one bucket. In other words, they don’t all look identical, but you will also find many similarities.
Now you need to find the best methods to target more consumers that match your current customer base. You must remember that if you target consumers they are more likely to be helped by special finance, you will convert a lower percentage of those consumers into your customers, so it’s important to find your “sweet spot.”
Below are a few suggestions we have found that are working right now for many BHPH dealers:
—Recent Repossessions: If a consumer has a recent repossession they are very unlikely to be helped at the franchised dealer down the street, but if you look at your current customer base, you will likely find that many of your customers fall into this category. This is a small, yet valuable target.
—Zero Scores: After doing the analysis suggested above, one of our BHPH dealers found that 40 percent of his current customer base had a zero score the day they put them on the books. As you know, there are numerous reasons for a consumer to have a zero score. It doesn’t always mean they have terrible credit like an extremely low score does. In many cases, a zero score is better than a 400 score.
—Low Credit Scores: If your local franchised dealership is getting everyone done with a score above 520, then don’t waste your money targeting consumers with score much higher than that. Think of going after a population with a score between 470 and 520. These consumers are much more likely to need your help.
In the “Don’t Do It” column, I would put the recently bankrupt consumer. These consumers have far too many options for financing at this time and, even if they respond to you, you will find the closing ratios are just too low at this time.
There is one more item we need to discuss. We know the market has changed, and we discussed changing your marketing. Since leads are few, leads are valuable. You need to make sure that your salespeople are trained to first convert leads into appointments. That is the most important sale they can make. In a recent BHPH seminar I attended, the very intelligent presenter stated that it’s more important for your salespeople to be great at closing appointments than they are at closing sales. If you fill your showroom with the right appointments, closing the sale is easy.
Make a few changes to your marketing and your processes, and you’ll find that business can be pretty good even though the pendulum is a little too far to the left.Y ou know what they say … When the going gets tough, the tough get going! Good luck and good selling!
Denny Long is president of Credit Mail Experts. He can be reached via email at email@example.com.