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ReprintsHow to zap zeros, raise your averages
LAS VEGAS -- You try your best to present the product menu but the customer still says no. You're left with the dreaded zero transaction that brings down your average sales penetration -- and your income.
What can you do?
Luis Garcia, training director for Safe-Guard Products International, an Atlanta supplier of F&I products, suggests working on selling products to the toughest customers: those who pay cash, those who lease and those who buy high-mileage used vehicles.
At the average new-car store, cash buyers represent about 30 percent of the business, lease customers are 10 to 40 percent, and high-mileage used-car buyers are about 10 percent, he says.
"These three are at least 30 to 40 percent of the business we do in our stores," Garcia told attendees of a seminar during the recent F&I summit here. "That's a big chunk of our business."
Garcia offered tips for zapping the zeros and raising sales-penetration averages:
• Congratulate the cash customer. Don't try to convert cash customers to finance, or their guard will go up and you will be less likely to sell product. Instead, compliment them on their financial position, letting them know only a small fraction of customers are able to pay cash. "That builds up the customer's ego," Garcia says.
• Don't try to convert lease customers to finance, either. Reinforce their decision to lease and tell them few people qualify for leasing.
• Sell the safety of a service plan. Cash customers are often conservative folks who like to save their money. Some of these customers might want a service plan to protect their savings.
• Forget the service plan for lease customers. Lessees are generally under warranty throughout the lease and they don't own the car. But they still bear the risks incurred from driving the car -- dents, chipped paint, worn tires -- and must repair excess wear and tear at lease end, Garcia points out. They can lose all or part of their security deposit when they return the car. Promote the lease wear-and-tear plan that protects them from excess wear charges at the end of the lease. The dent-and-ding coverage, lost-key replacement and windshield protection, or a combination or those products, appeal to lease customers.
• Offer products that can easily be charged to a credit card. For cash buyers and buyers of high-mileage vehicles, the price point is typically $300. One example is tire-and-wheel coverage, which appeals to people who buy high-mileage cars because they're cost-conscious. The repairs resulting from just one pothole can justify the coverage.
• Offer roadside assistance. This also attracts owners of older used cars, which are more prone to break down. And it's a bargain, Garcia points out. One year of AAA coverage is often more than $80, whereas a five-year roadside assistance policy can go for $199.
• Promote pay-as-you-go to the lease customer. Instead of getting socked with hefty excess wear-and-tear charges at the end of the lease, wear-and-tear coverage can be rolled into the monthly payment.
• Offer lessees a hassle-free driving experience. Including a prepaid maintenance plan and tire-and-wheel coverage means no more shop bills. The service writer hands them the keys, and they're on their way.
