Il 0715 by NIADA

WASHINGTON UPDATE

RETAIL RELATIONSHIPS

Dealer’s

ILLINOIS CONFERENCE HIGHLIGHTS

Edge

I L L I N O I S I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N

magazine

a fresh look and feel

I L L I N O I S

I N D E P E N D E N T

A U T O M O B I L E

D E A L E R S

A S S O C I A T I O N

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Inside J U L Y / A U G U S T

06 DIRECTOR’S REPORT

08 TIMELESS ADVICE

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WHAT’S NEW

National Quality Dealer Award Ceremony Online

The final event of the NIADA Convention & Expo honors the crowning achievement for an independent dealer, being named National Quality Dealer of the Year. The entire broadcast of the National Quality Dealer Award Ceremony can be viewed on www.niada.tv under the “Industry Events” channel.

ADVERTISERS INDEX

10 NIADA.TV

14 WASHINGTON UPDATE

16 RETAIL RELATIONSHIPS

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SOCIAL MEDIA & ROI

20 ILLINOIS CONFERENCE HIGHLIGHTS

22 PROFITABILITY & COMPLAINT MANAGEMENT

26 BOUNCERS AT THE BARBECUE

ADESA …..…..…..…..…..…..…..…..…..…. 19 AUTOZONE…..…..…..…..…..…..…..…..… 17 BLACK BOOK…..…..…..…..…..…..…..…..…3 DYER AUTO AUCTION …..…..…..…..… 23 INDIANA AUTO AUCTION …..…..…. 22 INSURANCE AUTO AUCTIONS …..…. 15 MANHEIM.COM …..…..…..…..…..…..… IFC MANHEIM MINNEAPOLIS …..…..…..…5 MANHEIM PENNSYLVANIA …..…..…. 13 NEXTGEAR CAPITAL…..…..…..…..…..…IBC PERITUS PORTFOLIO SERVICES …..… 24 PREFERRED WARRANTIES …..…..…..…7 PROTECTIVE …..…..…..…..…..…..…..…..…9 TRUECAR …..…..…..…..…..…..…..…..…. 25 VAUTO …..…..…..…..…..….. BACK COVER

OFFICE

For information on how to become a member of IIADA, please contact Bruce Eklund at 800-987-6627 or lilcheeper5@ aol.com.

NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM WWW.NIADA.TV 2521 BROWN BLVD. ARLINGTON, TX 76006-5203 PHONE (817) 640-3838

FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM. The Dealer’s Edge is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of The Dealer’s Edge, the Illinois Independent Automobile Dealers Association, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of IIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright ©2015 by NIADA Services, Inc. All rights reserved. Visit the NIADA Website at www.niada.com. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST Chantae Arrington • chantae@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing

INDUS T RY NE W S

NIADA 2015 Used Car Industry Report Just Released NIADA’S 2015 USED CAR INDUSTRY REPORT UNVEILED

The 2015 Used Car Industry Report has more sections of data than ever before, with data, analysis and insight from many new industry partners and researchers to provide the best overall snapshot of the used car industry. It also includes consumer data designed to help dealers better understand how the industry and its customer base are evolving, what trends are developing and how to forecast where the industry and your dealership are heading. For the second consecutive year, the Used Car Industry Report includes the complete 2014 NAAA Annual Review, as well as the NADA 2014 Used Vehicle Price Forecast. Among the highlights: NIADA now has a two-year history of member data and member business confidence survey results to compare. Equifax for the first time has taken that business confidence data from the past few quarters and presented conclusions, opinions and critical business confidence indicators. There are also NABD’s Buy Here-Pay Here benchmarks, information from Autotrader’s 2015 Automotive Buyer Influence Study, CARFAX’s consumer

online search data, Dealertrack’s digital retailing workflow, analysis of the auto finance and subprime markets from Experian, Equifax and Moody’s, and much more. This report will be mailed free to NIADA members in July, and will available to association members online at www.niada.com/publications.php.

BOARD OF DIRECTORS President Gordon Tormohlen Tormohlen’s Good People Automotive 1800 S Ihm Blvd Freeport, IL 61032 815-232-5543 goodpeople@aeronic.net Secretary Eric Nelson Nelson Automotive Inc 1801 S Busse Mt Prospect, IL 60056 Eric@heycars.com Treasurer Lori Chignoli-Cora Chignoli Auto Sales 1850 Essington Rd Joliet, IL 60485 Lori@chignoli.com

Executive Director Bruce Eklund IL-IADA Headquarters P.O. Box 7266 Rockford, IL 61125 800-987-6627 lilcheeper5@aol.com Board Members Alex Tovstanovsky Prestige Motor Works 11258 S. RT. 59 Naperville, IL 60564 630-631-2535 Amy Goodnight Lohman Companies 3901 15th St. Moline, IL 61266 309 764 8331x220v amy@lohman-companies.com Paul Gluchowski Turner Acceptance 4454 N. Western Ave. Chicago, IL 60630 773 290 5002 paul@turneracceptance.com

Janette Peak PJP Auto Enterprise 3100 S. Douglas Springfield, IL 62704 217 793 3552 pjpautosale@comcast.net Paul Schmidt Nationwide Acceptance 3435 N Cicero Chicago, IL 60657 pschmidt@nac-loans.com Russell Hughes Hughes Auto Group 1080 East Main St. Galesburg, IL 61401 309.342.2277 info@hughesautosales.com

www.il-iada.org 800-987-6627

ASSOCI AT ION NE W S

What Can You Do For Me?

DIRECTORS REPORT

Hi all. As I write, we have just finished our second dealer conference of 2015. The first conference was held in January in the St. Louis area with ABC Auto Auction as the major sponsor. The conference was a one day event with many topics dealers have asked for, such as compliance. Many vendors attended and were given time to present their products. All had a good time and many ideas were discussed by the speakers, vendors and dealers

in attendance. The second conference was held May 3-5 at the Lake Lawn Resort, a totally renovated resort. The event started with a golf tournament featuring a “hole-in-one” worth $50,000. The money was almost given away when a ball landed within three feet of the hole. The “hole– in-one” sponsor was Lohman Insurance and board member Amy Goodnight. The Sunday and Monday night receptions gave everyone a chance to interact with other dealers and the sponsors that made this all possible with their generous contributions. This month’s magazine has pictures of the event. We had two nationally known speakers: Joe Lescota, NIADA director of dealer development, and Ken Shilson of BHPH fame.

The breakfasts for each day were sponsored by AutoZone and Future Profits, representing the ASC warranty company. The lunch on Monday was sponsored by Turner Finance and Tuesday’s lunch was sponsored by Nationwide Finance. This conference was a must for dealers looking for information on how to improve their dealerships. A lot of topics were covered, such as the bottom line profit and how to get there with your current facility and staff. We had a session on the Hispanic market and also how not to go out of business. The dealers all had a chance to ask questions of the speakers as well as their fellow dealers in attendance. We have found this is very helpful and well received. The Illinois state legislative session is nearly over with no

BY BRUCE EKLUND

damage to the dealers in Illinois. Representation at the state level is part of what we do to help you as an independent dealer and is one reason we need you to become a member of your IIADA. The three “Open Sunday” bills will not be passed this year. You can look up and follow the bills, presented from inception to completion, on our website: www.il-iada.org. There is one more bill pending that says you cannot remove a tracking device or disable a vehicle even though no payment was made. It is my guess that this bill, SB0141, will not pass. A special thanks to those of you who have taken the time to call your senator! What can you do for me or how about “what can we do for you?” Enjoy your summer and “Go sell something!”

M A N AGEMEN T M AT T ERS

EMBRACING TECHNOLOGY IN EVERY AVENUE OF BUSINESS

DEALER’S EDGE

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TECHNOLOGY ADVANCEMENTS AND FLOOR PLANNING

Technology has grown by leaps and bounds over the last few years, which means consumers are more tech-savvy today than at any other time in history. Not only do consumers have a wide scope of information available to them via online channels such as Autotrader, Cars.com and TrueCar, but the use of social media as a community to discuss questions, issues and wants continues to rise. In a recent study by Capgemini, 73 percent of 10,571 individuals stated they are more likely to buy a specific model or brand if they find positive comments on social media. This showcases the importance of being accessible, responsive and proactive in delivering value-added services to your

customers, both in person and online. With the abundance of information available to consumers, it’s imperative that dealers also take advantage of the technology available to them. At bare minimum, it’s important to understand online avenues like OVE and Cars.com when it comes to purchasing and selling inventory. However, there are a number of other tools, like vAuto’s AuctionGenius or ProVision, which can help you accurately source and manage inventory with the click of a button. Additionally, in a world where time is money, the technology offered by your floor plan provider can be beneficial to your bottom line. Therefore, it is vital you partner with an

inventory finance company that offers the right technology to allow you to efficiently make purchasing decisions. What’s exciting is that floor planning has never been faster or easier. The availability of online and mobile solutions allows you to manage your account directly from your computer, tablet or smartphone. This includes making payments, viewing titles and reviewing key performance indicators specific to your account. Technology advancement has also allowed for crossplatform functionality, meaning you should ask if your floor plan provider is integrated with evaluation tools such as MMR, Black Book or Kelley Blue Book. These tools can provide insight on potential market opportunities

BY NEXTGEAR CAPITAL

THESE TOOLS CAN PROVIDE INSIGHT ON POTENTIAL MARKET OPPORTUNITIES TO DEVELOP YOUR BUSINESS AND IMPROVE INCOME OPPORTUNITIES. to develop your business and improve income opportunities. In this business, you need to take advantage of any resource that can help increase your bottom line, and that means having the right technology. So next time you’re talking with your floor plan account representative, you should make it a point to ask what the company is doing to stay ahead of the technology game.

P RODUC T S & SERV ICES

DE A L ER P ERSP EC T I V E

LESSONS LEARNED OVER 75 YEARS

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Seventy-five years ago (May 15, what he or she came to you for. 1940), my dad, Paul Tormohlen, But that’s not enough. got his first job as a “gopher” at That’s merely doing your job. Roy Carlson’s Hudson dealership To succeed long-term, your in Rockford, Ill. He was 17 personal marketing years old. That job was strategy must include the beginning of his pleasing the lifelong automotive customer enough career and a family to merit their return legacy that continues when they have with me and my two another need. adult children. We Let me be clear: are a three generation I’m not talking automotive entrepreneur about giving them PAUL TORMOHLEN a really good deal. I’m family engaged in one of the most dynamic markets in the talking about the intangibles, world. like smiling, saying thank you, Today’s automotive marketplace following up, introducing them isn’t for the faint of heart. to your fellow employees, etc. In Competition is fierce. Customers short, forming a relationship with are less loyal than they used them. Helping the customer is to be. Good help is hard to your top job responsibility! find. So on this day, I thought it Serve your customers better would be appropriate to share than your competition. some sage wisdom from a guy Yes, there are others out there who succeeded in one of the who want the same customers most competitive businesses in you do. Defeating them using America for over 73 years. conventional weapons can take Find a job that you love and years and simply isn’t practical. you’ll never work a day in your Instead, you must compete life. by offering a greater value On the surface, this may seem proposition to your customers. rather obvious. It has nothing Start by learning and to do with wages, benefits or understanding who your key whether a job is “hot” or not. competitors are and how they It’s about being challenged, operate. While it is important accomplishing something, for a salesperson to know the growing personally and in your benefits of his product over skillset, and finding your cause. comparable products, that’s It’s really not a job, it’s your not what we’re talking about. calling. Keep searching until you You must be aware of the find it and work will no longer be strengths and weaknesses of the laborious. competitors in your market area. Serve your customers. Constantly seeking to better I can’t think of any business educate yourself on industry that doesn’t have a customer. At trends and actually shopping a very basic level, a customer your competitors are your best honors you by seeking help with tools here. If the business down their perceived need or want. the street sells their products on You need to understand this paper thin margins, you will need creates an obligation on your to decide how to combat this price part to help them. It therefore policy. You could match them, becomes your job to make or you could design a selling certain the customer receives process that helps the customer

BY GORDON TORMOHLEN

ENTREPRENEURS TODAY HAVE MANY CHALLENGES TO OVERCOME, BUT GREAT OPPORTUNIT Y STILL EXISTS FOR THOSE WHO STAY IN THE GAME AND FOCUS ON THE BASICS. realize that you’re worth more. By understanding the competition, you will be better equipped and better positioned to do battle in the marketplace and earn your customer’s business. Make a profit. Contrary to popular opinion, earning a profit is not a bad thing. If you were to place your life’s savings in the stock market, you would expect that investment to grow and earn a return. In a similar fashion, every business owner deserves to make a profit. Otherwise why would they invest their savings in the business? But it doesn’t stop there! Employees invest their time and talent in their jobs, and are paid a profit based on the value of their efforts. In turn, these wages and profits generally circulate throughout your local economy, benefitting other businesses. Lastly, making a profit enables you to pay taxes which helps the government operate (no comment on whether or not this is a good investment… that’s a subject for another kind of post). In our marvelous free market economy, profit is the key to all things good! Although Dad is no longer with us, his wise words are timeless. Entrepreneurs today have many challenges to overcome, but great opportunity still exists for those who stay in the game and focus on the basics. That’s what we Tormohlens will be doing on day 1 of our 76th year. Good selling!

NextGear Integrates KBB Values Within Apps INTEGRATION PROVIDES CURRENT MARKET-REFLECTIVE VALUES BY SUBPRIME AUTO FINANCE NEWS STAFF

In effort to help dealers monitor their floor planning resources more efficiently, NextGear Capital has added Kelley Blue Book values to its myNextGear Web and mobile applications. As a result of this integration between the two Cox Automotive business units, NextGear Capital customers can now receive current marketreflective values at no additional cost for new and used vehicles. “By continually adapting the way we put information in front of our customers, we can offer them greater flexibility in how they do business,” said Bryan Everly, chief technology officer with NextGear Capital. “We are constantly challenging ourselves to make our product better, and that includes providing cross-platform functionality with other Cox Automotive solutions,” Everly continued. The addition of Kelley Blue Book values comes less than a year after NextGear Capital added MMR values to myNextGear. Through these evaluation tools, dealers have access to entry-level data to help them make informed purchasing and selling decisions from either the comfort of their office or on the go. “Trusted by consumers and the industry, it was a natural choice to provide Kelley Blue Book values to NextGear Capital customers,” said Dan Ingle, vice president of vehicle values and industry solutions for Kelley Blue Book. “Kelley Blue Book’s information will not only help mitigate risk, but this aligns with the overall company strategy to provide relevant marketreflective values at the point they are needed in the transaction process.”

ASSOCI AT ION NE W S

A Fresh Look & Feel

DEALER’S EDGE

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NIADA.TV NETWORK’S NEW DESIGN PROVIDES ADVANCED WAYS TO WATCH AND USE TRAINING VIDEOS BY CHASE TIDWELL

It seems ages ago when NIADA introduced a streaming video education website for its dealer members. Now, 11 years later, NIADA has rebranded and re-tooled the NIADA.TV Network to meet the growing needs and technological demands of our online users. The response to the new site design and functionality at the recent NIADA Convention and Expo was overwhelming, from both dealer members and vendors. In the infancy of dial-up connections and long before the YouTube streaming video invasion, NIADA was among the first entities in the world to create an online streaming video educational environment, unveiling NIADA.TV for its dealer members in 2004. The new NIADA.TV was first used to educate members about the OFAC initiative set forth by the federally mandated requirement to fight terrorism after 9/11, and the association quickly realized it had seen the future of instant online news delivery. From that first online educational initiative, NIADA.TV has evolved into a full-fledged industry network. More than 500 hours of quality dealer education is available on the site today, including Automotive Industry News, a weekly streaming video news program accessible on three websites, as well as a slew of vendor partner special monthly programs, auto tips, infomercials and educational sessions from industry events nationwide.

THE NIADA.TV NETWORK HAS BECOME THE FREE, ONE-STOP ONLINE SOURCE FOR AUTOMOTIVE INDUSTRY PROFESSIONALS TO FIND ANYTHING AND EVERYTHING AUTORELATED.

The NIADA.TV Network has become the free, one-stop online source for automotive industry professionals to find anything and everything auto-related. “When we first envisioned NIADA.TV, there was very little, if any, streaming video online, and the complexities of streaming video and slow dial-ups were our number one foe,” NIADA CEO emeritus Mike Linn said. “It took a few years and a whole lot of education before our dealers started catching on, but the quick emergence of broadband Internet connections greatly assisted the cause.” The newly redesigned NIADA. TV site still includes up to two years of automotive educational sessions from conferences and conventions across the country. But it’s now easier to find relevant content through particular channels and keyword searches, and users have the ability to rate and share content through all of their social networks. “Technology has finally caught up with us, and with the emergence of a younger generation of dealers familiar with sharing of content online with their fellow employees and their online social circles, the ability to share and rate the content were two of the most important enhancements we knew had to take priority in the development of the new NIADA.TV website,” NIADA national sales manager Troy Graff said. “Another major improvement to the site is that our entire video platform is now 100 percent compatible for mobile device viewership.” For dealers who are unaware of the extent of the information that can be found on NIADA. TV, the network and its updated website can be a valuable training resource for your dealership and its employees. With so many channels and so much content available, dealers can refer to the site often and

show training videos to their staff as part of their daily or weekly sales/dock meetings. New Channel Debuts The newly designed site also debuts the new Aftermarket/ SEMA Channel, perfect for dealers with service bays and a thriving aftermarket business. And those who don’t have a service bay or don’t know how to start an aftermarket business can learn from the new channel, which teaches how and provides stepby-step instructions, training and tips of the aftermarket trade to help your business grow. “Accessorization is an untapped profit center for many dealerships and it can result in increased vehicle sales and attract new customers,” SEMA senior manager of councils Clayton Drescher said. “To help dealers understand the restyling industry, the SEMA Professional Restylers Organization collaborated with NIADA to produce videos that expose dealerships to the incredible diversity of products and services available through the aftermarket. “Members of the SEMA PRO council, which represents accessory manufacturers, installers and vehicle restylers, are available to help NIADA members expand or develop their accessory programs.” NIADA.TV also provides online training and videos on other network channels, including Sales, BHPH, Operations, F&I, Remarketing, Regulatory and Compliance, Special Features, Industry Events, Association News and more. The new keyword search capability on the site is another great way to obtain video content through the keywords contained in each video’s description. And once you are watching a video of your choice, the new site also recommends similar video content options. Industry Vendors Benefit Dealers aren’t the only ones

who can benefit from the NIADA.TV Network. Vendors and industry partners have found NIADA.TV to be one of the most effective marketing media to reach a highly targeted dealer audience. Most of the industry’s largest and most recognizable brands have invested and continue to invest more of their yearly marketing budgets on NIADA. TV program and channel sponsorships, live broadcast commercials, infomercials and special monthly programming. Among the most recognizable are Autotrader, AutoZone, CARFAX, AFC, Cars.com, Manheim, NextGear Capital, RentA-Wreck, Sirius XM and TrueCar. And there are many more.

DEALERS AREN’T THE ONLY ONES WHO CAN BENEFIT FROM THE NIADA.TV NETWORK. VENDORS AND INDUSTRY PARTNERS HAVE FOUND NIADA.TV TO BE ONE OF THE MOST EFFECTIVE MARKETING MEDIA TO REACH A HIGHLY TARGETED DEALER AUDIENCE. “One problem that turned into a great opportunity on the video production front for NIADA. TV was the fact that many auto vendors have very little video content in their marketing repertoire,” Graff said. “NIADA. TV provides a very valuable, experienced and, most important, very economical alternative to fulfill their video and streaming commercial production needs. “When vendors find out they can use these new commercial videos and special video projects for many of their own marketing initiatives above and beyond placement on NIADA.TV, it is an easy sale.” The NIADA.TV studio at the association’s headquarters in Arlington, Texas, continues to host many client and vendor CONTINUED ON PAGE 12

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A FRESH LOOK & FEEL

WITH SO MANY CHANNELS AND S O M U C H C O N T E N T AVA IL A B L E , DE ALERS CAN REFER TO THE SITE OF TEN AND SHOW TRAINING V I D E O S T O T H E I R S TA F F A S PA R T O F T H E I R DA ILY O R W E E K LY S A L E S / D O CK M E E T I N G S.

“ T H E N I A DA .T V S TA F F A R E T R U LY T O P - N O T C H P R O F E S S I O N A L S. T H E Y W E R E E X T R E M E LY E A S Y T O W O RK W I T H A N D S AV E D U S I N P R O D U C T I O N C O S T S.”

productions. The state-of-the art studio provides vendors with easy access to a video production location just a few minutes from Dallas-Fort Worth International Airport, the country’s third-largest airport, in the center of the United States. The studio includes up to a three-camera shoot capability and a green-screen wall with room to shoot an entire panel of experts. Live broadcasts of special industry events, educational sessions and panel discussions can also be easily shot at the new studio. AutoZone was among the first to use the facility when NIADA. TV filmed and produced its A-to-Z Video Education Series using green-screen technology at the studio. Since then, the studio in Arlington has hosted shoots for AFC, Penske and Rent-A-Wreck, to name a few. Trainers such as Paul Webb use NIADA.TV’s production capabilities for their sales training videos. The NIADA.TV production team also travels across the country to shoot various company videos, special programming series and automotive events, conventions and conferences. “The NIADA.TV staff are truly top-notch professionals. They were extremely easy to work with and saved us in production costs,” AFC vice president of marketing and business development Neill Waters said. “From script writing to shoot direction to post production sound and special effects and editing, the NIADA.TV solution was the way to go for us.

“We couldn’t be happier with our new six-part monthly special program series 2-Minute Tip that is currently airing on the NIADA. TV network. The feedback received throughout the industry has been excellent. We can’t wait to get back to Dallas later this year for some follow-up shooting. Live Events Among NIADA.TV’s greatest accomplishments annually are the live webcast of the NIADA Quality Dealer of the Year Awards, live from the NIADA Convention, and the World Automobile Auctioneers Championship. The edited rebroadcast of each of those yearly events can be found by clicking on the Industry Events Channel. “The live webcast of those two huge industry events is yet another testament to the brilliant staff and team we have assembled for NIADA.TV,” NIADA executive vice president Steve Jordan said. “Michael Marashlian and his production team in California played an integral role in the start-up and continued success of NIADA.TV, and that legacy is now carried on by staff producer Reid Mullins.” Online streaming video is a powerful marketing tool that is expanding by the day. As competition for online viewing continues to grow, NIADA is committed to its online mission to educate dealers through the NIADA.TV Network. Federal and state regulatory issues continue to re-shape the used auto industry daily, and Jordan believes NIADA.TV is the perfect medium to deliver relevant and timely information on the go. Everyone, from franchise and used vehicle dealers to their employees, from the entire auto industry to the consumer auto enthusiast, has a reason to check out NIADA.TV. At the very least, dealers owe it to themselves to view the most recent NIADA Convention education sessions. NIADA Online Convention As part of the new site, NIADA. TV for the first time now hosts the

THE NIADA ONLINE CONVENTION WILL ALSO FEATURE THE ENTIRE NATIONAL QUALITY DEALER OF THE YEAR AWARDS AND THE YEARLY NIADA LEADERSHIP AWARDS BANQUET, EACH FILMED LIVE FROM THE CONVENTION.

AFC vice president of marketing and business development Neill Waters

brand new NIADA Online Convention. The microsite within NIADA. TV, scheduled to debut in mid- to late July, houses videos of every general session, breakout session and special event of the most recent NIADA Convention. It will begin by bringing viewers all of the content and excitement of the 2015 event, held last month in Las Vegas. “The educational content from our annual convention has always been displayed on NIADA.TV, but it was typically always scattered throughout the site,” NIADA director of events Holly Swanzy said. “Having a complete area of the website that specifically houses the NIADA Convention educational content in one themed area is a brilliant way to promote the NIADA Convention and all of its fanfare for the future.” Besides housing all of the education videos, the new NIADA Online Convention includes the first NIADA Virtual Trade Show. Online viewers can search the VTS area by company and watch a short video of that company’s product and service offerings directly from inside the vendor’s NIADA booth. The NIADA Online Convention will also feature the entire National Quality Dealer of the Year Awards and the yearly NIADA Leadership Awards Banquet, each filmed live from the convention. The NIADA Online Convention will be free for all convention attendees using the email address they provided at registration. The NIADA Online Convention will also be made available to dealers who did not attend the convention for a onetime yearly fee of $149.

“THE LIVE WEBCAST OF THOSE TWO HUGE INDUSTRY EVENTS IS YET ANOTHER TESTAMENT TO THE BRILLIANT STAFF AND TEAM WE HAVE ASSEMBLED FOR NIADA.TV.” NIADA executive vice president Steve Jordan

“Every year we receive questions from convention attendees about obtaining access to educational sessions they were not able to physically attend while in Las Vegas,” Swanzy said. “Attendees can find it all in one spot online, and they don’t have to pay anything additional for it. Plus, they can always find a session they attended and liked and wanted to share with their other employees when they get back to the dealership.” The Online Convention and Virtual Trade Show, as well as the redesigned site with its increased capabilities, represent the latest step in the ongoing evolution of the NIADA.TV Network, which has been on the cutting edge of Internet streaming video since Day 1. We invite you to visit www. niada.tv and discover what’s new at the premier online source for video education for the used vehicle industry. CHASE TIDWELL IS NIADA’S VICE PRESIDENT OF MEDIA SERVICES.

WASHING TON UP DAT E

NIADA GOVERNMENT REPORT

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HERE’S A RUNDOWN OF SOME OF THE LATEST GOVERNMENTAL ISSUES AND ACTIVITY AFFECTING THE USED CAR INDUSTRY FROM NIADA REGULATORY COUNSEL SHAUN PETERSEN AND NIADA LOBBYIST SANTE ESPOSITO.

REGULATORY REPORT Federal Trade Commission Operation Ruse Control: The FTC finalized two consent decrees involving automobile dealers as part of the Operation Ruse Control sweep announced in March. Under the settlement orders, Jim Burke Nissan of Birmingham, Ala., and Ross Nissan of El Monte, Calif., are prohibited from misrepresenting in any advertisement the cost to purchase or lease a vehicle or any other material fact about the price, sale, financing or leasing of a vehicle. The consent orders also address alleged Truth in Lending Act and Consumer Leasing Act violations by requiring the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws. Jim Burke is also prohibited from representing that a discount, rebate, bonus, incentive or price is available unless it is available to all consumers or the qualification terms are clearly and conspicuously disclosed. The FTC also approved a final consent order with National Payment Network over claims it deceptively advertised its biweekly auto loan program. NPN is required to issue $1.5 million in refunds and waive $949,000 in current fees, and is prohibited from making deceptive claims about its payment program or other add-on products or services. Consumer Financial Protection Bureau Rulemaking agenda: The bureau released its spring rulemaking agenda, which includes a final auto finance larger market participant rule, expected in June; pre-rule activities on an installment and auto title loans larger market participant rule, to begin in January; additional pre-rule activities on a debt collection rule, including the convening of a small business panel, to be held in December; and pre-rule activities on possible rules governing predispute arbitration agreements, set for September. Meeting with Ombudsman’s office: On May 11, NIADA met

with representatives of the CFPB Ombudsman’s office to discuss our concerns with the bureau’s process for inviting BHPH dealers and their RFCs to sign up for the CFPB’s online complaint portal. Among the concerns was the lack of clarity about why certain entities received invitations and the invitation’s messaging, which gave the impression that signing up for the portal was mandatory. The Ombudsman’s office met with the bureau’s departmental staff to address the concerns. Department of Justice Evergreen Bank settlement: DOJ settled with Evergreen Bank Group of Oak Brook, Ill., for allegedly charging 2,200 minority borrowers higher interest rates through its FreedomRoad Financial motorcycle lending program in violation of the Equal Credit Opportunity Act. The program allowed dealers to mark up the rate and, according to DOJ, such discretion came without guidance or direction from the bank, leading to higher rates for minorities compared to Caucasian borrowers. As part of the settlement, Evergreen will eliminate or limit the discretion it gives to motorcycle dealers to increase interest rates and will pay $395,000 in compensation. State Attorneys General Thirty-one state attorneys general announced a settlement with the three major credit reporting agencies – Equifax Information Services LLC, Experian Information Solutions Inc., and TransUnion LLC. The settlement stems from an investigation focused on consumer disputes about credit report errors, monitoring and disciplining providers of credit reporting information, accuracy in consumer credit reports and the marketing of credit monitoring products to consumers who call the credit reporting agencies to dispute information on their credit report. The credit reporting agencies agreed to increase monitoring of data furnishers, require additional information from furnishers of certain types of data, limit directto-consumer marketing, provide greater protections for consumers

who dispute information on their credit reports, limit certain information that can be added to a credit report, provide additional consumer education and comply with state and federal laws, including the Fair Credit Reporting Act. LEGISLATIVE REPORT Military Pay Allotment As reported last month, NIADA’s language calling for the Secretary of Defense to brief the Armed Services Committee on the “process and justification” for the recent decision to prohibit military personnel from using their pay allotments to purchase personal items, including motor vehicles, was included in H.R. 1735, the FY16 National Defense Authorization Bill. The bill passed the House by a 269-151 vote May 15. That issue, however, did not make it into the Senate’s bill. NIADA is working with Sen. Lindsey Graham (R-S.C.), chairman of the Armed Services Committee’s Subcommittee on Personnel and a supporter of NIADA’s position, and Sen. Thom Tillis (R-N.C.) on including the allotment issue. S.304, Motor Vehicle Safety Whistleblower Act The bill, introduced Jan. 29 by Sen. John Thune (R-S.D.), was passed by the Senate on April 28. It grants whistleblower incentives and protections for motor vehicle manufacturer, parts supplier or dealership employees or contractors who voluntarily provide the Secretary of Transportation with information relating to any motor vehicle defect or any violation of notification or reporting requirements likely to cause unreasonable risk of death or serious physical injury. The bill allows DOT to pay whistleblowers up to 30 percent of the total collected from any monetary sanctions exceeding $1 million. It also subjects whistleblowers found to have knowingly and willfully made false representations to criminal penalties. MAP-21 Reauthorization On May 19 the House approved a bill to extend the

ON MAY 11, NIADA MET WITH REPRESENTATIVES OF THE CFPB OMBUDSMAN’S OFFICE TO DISCUSS OUR CONCERNS WITH THE BUREAU’S PROCESS FOR INVITING BHPH DEALERS AND THEIR RFCS TO SIGN UP FOR THE CFPB’S ONLINE COMPLAINT PORTAL. MAP-21 highway and transit authorization through July 31, and the Senate concurred May 22. A number of House members had threatened to vote against the bill as a protest of Congress’ handling of the Highway Trust Fund solvency crisis and the continued use of short-term extensions. FY16 Congressional Budget Resolution The fiscal year 2016 resolution passed by the House on April 30 and the Senate on May 5 includes an item allowing the Senate Budget Committee chairman to adjust the budget if legislation is passed that subjects the Consumer Financial Protection Bureau to the regular appropriations process. Currently it is funded without Congressional oversight, but several bills are pending that would change that. The budget resolution also calls for ending the Federal Deposit Insurance Corporation’s authority to access taxpayer dollars in order to bail out the creditors of large, “systemically significant” financial institutions.

DE A L ER BES T P R AC T ICES

RETAIL RELATIONSHIPS

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HOW LENDERS VIEW YOUR DEALERSHIP

Most independent car dealers probably got their start by selling cars purchased with their own money. It likely didn’t take long to understand the importance of obtaining a line of credit to purchase new inventory and how that line of credit would enable them to exponentially grow their business. Not long after successfully selling cars and obtaining a line of credit, many dealers realize the importance of retail financing to help a dealership sell more cars, move upmarket into newer and higher end vehicles, as well as sell backend products. Obtaining your dealer’s license is typically straightforward. There is a list of qualifications published by state along with a schedule of the necessary fees, documents and insurance requirements. Obtaining a line of credit is very similar with many lenders providing dealers detailed information about required documentation, verifications, processes and financial standards. The length of time in business and credit worthiness can determine how much dealers will pay for their line of credit, and also how tightly the lender will hold their collateral. On the other hand, obtaining a retail financing source for your dealership’s customers is not always so clear. Why is that? How are lenders evaluating your dealership? It all comes down to risk and cost. Lenders view each dealership as a separate loan origination channel and have a variety of ways to forecast the risk and estimate the cost of each channel. Most lenders use historical data to forecast risk. This means lenders are looking for dealers with the same profile as other dealers who have efficiently produced well performing portfolios. What exactly are these lenders looking for? Many lenders look at basic attributes, such as how long the dealer has been in business, how long a dealer has conducted business in the same community or location, and whether or not the dealership is in good standing with their state motor vehicle commission. Many lenders want

to ensure that their brand is only associated with a certain type of dealership. Lenders also want to know about a dealer’s inventory. If a dealership is only stocking high mileage vehicles below $10,000, they may not have the proper inventory to match up with a lender’s program guidelines. Many lenders also want to verify the owner and management team have no prior criminal record. Make no mistake, this is where hiring the wrong people or not fully vetting new hires can really be damaging. It demonstrates an unacceptable level of risk, and with many of the new regulations requiring lenders to know their vendors/customers this is not a negotiable point. Both personal and business references can play a large part in gaining access to a new retail financing source. Business references, such as auctions, floor plans and warranty providers can be some of the best allies. Maintaining a good relationship with your vendors and partners is key. Many lenders also see independent dealers as a slightly higher risk than franchised dealers because of the lower level of working capital and the absence of oversight and guidance provided by new car franchises. One of the most important factors determining whether you gain access to a lender is your financial picture. Lenders want to know they’re dealing with a dealer that is not suffering from financial hardship nor headed for rough times. Lenders will look at both your business and personal credit history along with your recent accounting statements to understand your financial situation. Lenders also want to understand your cash flow situation and practices. The last thing a lender wants to do is give a cash-strapped dealer access to more credit. Some of the worst cases of retail lending fraud are perpetrated by dealers who try to use retail financing proceeds to better their situation without paying off the floor plan lenders or properly securing the retail

lenders lien. Once you’ve survived the underwriting process, you may be surprised to learn the agreement presented by the lender includes several caveats, such as the lender can terminate the agreement at any time and you may be on the hook for loan performance. You may also have financial obligations if one of your customers or employees commits fraud. Lenders want to know you are working to vet your employees and customers, and will not simply turn a blind eye to red flags indicating potential fraud. So, now that you have the lenders you are searching for how will you keep them? For many years lenders have had a varying appetite for doing business with independent automobile dealers. Periodically lenders will terminate large groups of dealerships they deem to be low performing. It is important to understand how the lender will judge your dealership. They will be monitoring the performance of your portfolio and may ask the following questions: • Are the loans originated from your dealership running at a higher than average delinquency and repossession or loss rate? • Are your loan packages complete and accurate? Lenders do not like to follow up for missing stips or incomplete documents. Rework costs lenders real money. • Are you originating an adequate number of loans each month? Lenders assign a certain cost to managing a dealer relationship. If you are not originating performing loans, you are costing the lender money. Make sure you are directing enough loans to your lender on a monthly basis. Spreading your loans too thin or having too many lenders may make this difficult. One of the ratios your dealership will be measured by is your application to funded ratio. This is the ratio of applications you are sending in to the number of loans you are actually funding. Simply understanding your lenders program and not sending the lender applications that do not meet their minimum criteria can

BY CHET HEUGHAN

ONCE YOU’VE SURVIVED THE UNDERWRITING PROCESS, YOU MAY BE SURPRISED TO LEARN THE AGREEMENT PRESENTED BY THE LENDER INCLUDES SEVERAL CAVEATS, SUCH AS THE LENDER CAN TERMINATE THE AGREEMENT AT ANY TIME AND YOU MAY BE ON THE HOOK FOR LOAN PERFORMANCE. improve your ratio. Lenders also look at your approved application to funded ratio. This is the number of approved applications versus the number that actually result in a funded loan. Shotgunning a great credit application to all your lenders is simply irresponsible. Make sure you understand which programs are best for you and your customer before submitting an application. When the lender repeatedly approves credit applications and does not receive loans, you are costing them money. No lender wants to know that you have great loans but choose not to send them their way! On the other hand, a solid relationship between a lender and a dealership can be lucrative for both parties. Most dealerships can generate more consumer loans than the typical community bank branch. This offers lenders a much more cost-effective way to generate a secured consumer loan portfolio. In today’s environment, strong dealerships have many choices when it comes to retail financing. Choosing the right mix of prime and subprime lender programs and then managing the relationship and expectations will ensure you are able to offer financing choices to your customers as well as grow your business safely and profitably through the ups and downs of the market. CHET HEUGHAN IS DIRECTOR OF APP ONE RISK MITIGATION SERVICES, INDIRECT LENDING FOR WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW. WOLTERSKLUWERFS.COM.

P RODUC T S & SERV ICES

Citrix ShareFile

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BY BHPH REPORT STAFF

The addition of Kelley Blue Book Values comes less than a year after NextGear Capital added MMR values to myNextGear. Through these evaluation tools, dealers have access to entrylevel data to help them make informed purchasing and selling decisions from either the comfort of their office or on the go. “Trusted by consumers and the industry, it was a natural choice to provide Kelley Blue Book Values to NextGear Capital customers,” said Dan Ingle, vice president of vehicle values and industry solutions for Kelley Blue Book. “Kelley Blue Book’s information will not only help mitigate risk, but this aligns with the overall company strategy to provide relevant market-reflective values at the point they are needed in the transaction process.”

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NIADA would like to announce a new member benefit with Citrix ShareFile. Citrix ShareFile is a cloud-based storage service offering fast, easy and secure file sharing that complies with industry regulations. This customizable solution integrates with tools you already use and provides automobile dealerships of all sizes with unlimited storage, top-grade security and legally binding e-signatures from RightSignature for quicker completion of contracts. Robust tracking and reporting features let you know and control who is viewing your files and when. To save time and money, use Citrix ShareFile. National Independent Automobile Dealers Association members receive a 10 percent discount with ShareFile, as well as: • Free 30-day trial. • Live one-on-one web demo. • 24/7 customer support via phone or email. For more information, visit http://sf-mktg-pages. sharefile.com/Associations-NIADA.html.

DEALERSOCKET BUYS AUTOSTAR SOLUTION

NEW NIADA MEMBER BENEFIT

DEALER’S EDGE

DEALERSOCKET BUYS AUTOSTAR SOLUTIONS

SOCI A L MEDI A

WHICH SOCIAL MEDIA SITES WILL GIVE ME THE BIGGEST ROI?

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SPECIFIC STEPS TO LEVERAGE THE MEDIUM

Social media ROI may seem elusive but there are specific steps you can take to leverage the medium without going broke. Marketing to generate leads for dealerships today requires a holistic approach that includes SEO, content (blog), social media and social advertising. It’s difficult to know where to concentrate your resources but it bears close attention due to the investment it takes to succeed. Now that social media marketing has gone mainstream... Many dealers are left wondering which sites will give them the biggest ROI. The simple answer to that question: Whichever sites your customers spend time on. However, true social media ROI is not that simple. You must know your audience well to know where they spend their time. You must know your audience to engage them and convert them into customers. Social media sites are channels, just like radio or TV channels. Marketing campaigns are run on the channels where your ideal customers spend their time. Content is developed and published on those sites (just as it would be on traditional channels), and in return people engage with your business. But this is only a portion of your overall quest for social media ROI. The only true way to establish and achieve social media ROI is with a solid marketing action plan. A solid marketing action plan will outline clear objectives, goals, a budget, a timeframe and trackable metrics. Your goals could look something like these examples: • Increase Facebook likes by 1,000 in 30 days. • Improve Facebook page engagement by 20 percent within the next three months. • Generate traffic to our site and collect 500 new blog subscribers in the next 90 days. • Convert Facebook fans into customers by leveraging a

budget of $500/month for social advertising. • Grow our Twitter following by 1,000 users in the next 90 days. • Develop and implement a solid content strategy that includes our employees’ participation in blog posts to increase visibility and reach with search engines. When it comes to investing in new media, dealers should think things through and create an action plan that brings the best results for the time, money and effort put into it. I see many dealers try to hip-shoot their way onto social media, perhaps misunderstanding that since it’s “free,” they should participate. Here’s a little secret: Nothing is free. People use social media sites to check in with friends, connect with their network and share relevant opinions about the products and services they use. Your dealership needs to be there to listen, answer questions and nurture the sales process with those most likely to buy from you. Below is a breakdown of the most popular social media sites. This is a bird’s eye view but it will give you a starting point from which to plan your quest for social media ROI:

(Infographic by Leverage New Age Media)

Which social media sites give you the biggest ROI? • If you’re new and only have budget for one site, start with Facebook. It’s the biggest and offers the most opportunity. • Facebook also offers established dealerships many opportunities to generate leads and sales with Facebook ads. The ability to target those most likely to buy from you makes Facebook an obvious choice when you’re looking for the biggest social media ROI. • Twitter is great if your target audience likes to consume information on the go in 140 characters. It’s also an outstanding way to prospect by leveraging Twitter’s advanced search and industry-related hashtags. • Instagram is ideal for showing another side of your brand – perhaps the fun-loving, not-soserious side of your business. However, the images you share need to be hi-quality and engaging to stand out. I can’t tell you how many dealerships share images that are just so sad. • Pinterest is great for reaching women. Women influence 85 percent of vehicle purchases.

BY KATHI KRUSE

GOALS AND OBJECTIVES PROVIDE A STARTING POINT FROM WHICH TO MEASURE. DURING THE LIFECYCLE OF YOUR CAMPAIGNS, TRACK AND ANALYZE YOUR RESULTS. WHEN IT’S TIME, YOU TIE YOUR RESULTS BACK TO YOUR GOALS. THAT’S TRUE SOCIAL MEDIA ROI. That means there’s a huge opportunity to develop a content strategy (part of your action plan) to engage them. • Google Plus is a great platform for engaging with niche groups of people. The Circles tool allows you to tailor content to specific groups. Google Plus is also ideal for sharing your blog posts and gaining authority with search. • LinkedIn is the ultimate platform for your salespeople to develop a referral network and prospect for new customers. With LinkedIn Premium, your salespeople can leverage advanced search to locate those they want to connect with. Example: many banks offer financing programs through large companies. Your salespeople can search for employees within those companies to prospect. Social media ROI is clearly where your focus should be. Start with a solid marketing action plan and identify your ideal audience before you begin any online marketing. Goals and objectives provide a starting point from which to measure. During the lifecycle of your campaigns, track and analyze your results. When it’s time, you tie your results back to your goals. That’s true social media ROI. KATHI KRUSE IS AN AUTOMOTIVE SOCIAL MEDIA MARKETING EXPERT, BLOGGER, CONSULTANT, AUTHOR, SPEAKER AND FOUNDER OF KRUSE CONTROL INC. KRUSE CONTROL COACHES, TRAINS & DELIVERS WEBINARS FOCUSED ON INTEGRATING SOCIAL MEDIA AND ONLINE REPUTATION MANAGEMENT INTO DEALERSHIP OPERATIONS.

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IIADA CONFERENCE HIGHLIGHTS MAY 3-4 AT LAKE LAWN RESORT

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Illinois IADA’s convention was held May 3-4 at Lake Lawn Resort. This must-attend conference was a huge success. It included a golf tournament and nationally renowned speakers Joe Lescota and Ken Shilson.

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IIADA MEMBERSHIP APPLICATION

M A N AGEMEN T

M AT T ERS

Increase Retention, Profitability by Cutting the High Cost of Consumer Complaints DISARM DISSATISFIED CUSTOMERS WITH A FORMAL COMPLAINT MANAGEMENT PROCESS

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No one looks forward to complaints. And since you work in the auto industry – the industry that fields more consumer complaints than any other – chances are you hear a lot of them. People complain about their overall vehicle experience more than their washers and dryers, even more than those annoying sales calls they get during dinner from the guy hawking aluminum siding. Some businesses that enjoy the benefits of monopoly, such as cable and utility companies, are immune to the negative effects of customer complaints, but auto dealers are not. And since you, an independent dealer, generally don’t have access to the large marketing and advertising budgets – or public and community relations support – your franchised competitors enjoy, it’s absolutely essential you treat each and every complaint you receive as a ransom note. Dedicated bureaus of the government and advocacy groups have been established solely to address the never-ending flood of consumer complaints in the automotive industry. The complaint business is a big business – one that’s very lucrative for

lawyers and other professionals waiting to cash in on your missteps. Traditionally, a bad customer experience all but guarantees negative attention from customers and potentially the market, media and government depending on the scenario. Complaints can cost your dealership lots of money and potentially your valued customers and people who may have otherwise become customers. Last year, independent used car dealerships lost 30 percent of the market to franchised competitors. That’s a staggering statistic that tells us not even your most loyal customers are immune to the barrage of communications they receive from local and not-so-local stores during the car-buying process. They know there are many other options out there, so it only takes someone feeling as if they – or a friend or family member – have been wronged (or slightly inconvenienced) to motivate them to seek alternative options. While franchise dealerships have more resources available to retroactively manage their reputations and shape perceptions of

BY ANTONIO RAJAN, DEALERSOCKET

their businesses among the public at large, independent dealers have less margin for error, if any. To level the playing field, you must plan ahead and be prepared to respond appropriately and effectively to each complaint (ransom note) you receive. In the past, dealers in the independent space have, for the most part, downplayed the profound impact of customer complaints on dealership profitability, and have lacked formalized best practices and technology to effectively manage customer feedback. Until now. The High Price of Ignoring Complaints Technology and constant connectivity have made the price of complaints unaffordable for dealers. People have always shared their negative experiences, but now they share them 24/7 via text messages, tweets, online reviews, blogs and a multitude of other media. Customers who write reviews online are often considered legitimate sources, and even the most biased review can be written in a way that seems objective and impacts public perception of your business. A whopping 78 percent of consumers are influenced by negative online reviews, so it’s vital that dealerships learn how to mitigate them, and more importantly, address customer complaints and turn dissatisfied customers into satisfied customers. Due to the sheer volume of cars – and online reviews – franchise dealers receive, they’re able to absorb, mitigate and ultimately overshadow negative online reviews with a handful of good ones over a period of weeks or months. Odds are the quantity of online reviews for your business is comparatively lower, and as a result, a negative review holds much more weight and impacts your average rating more substantially. What steps should your independent dealership take to effectively manage customer complaints to ensure customers, customers’ family members and all their friends return to your dealership instead of seeking out franchised competitors after a negative experience? FORMALIZE YOUR COMPLAINT MANAGEMENT PROCESS The best way to handle complaints is to give customers the attention they deserve. We do that through a fully integrated automotive technology platform that guides customers through service channels depending on their responses to a post-sale eSurvey. More so than in any other part of your business, top leadership must be engaged to manage complaints swiftly and effectively. A rigorous, consistent complaint management process ensures even the most

Increase Retention implementing better business practices. The Necessity of Complaint Tracking and Data Integration Without a repeatable process for tracking customer complaints from inception to resolution, your business is destined to continue making the same mistakes again and again at the expense of meaningful longterm relationships with your customers and, ultimately, profitability lost. With a fully integrated automotive technology system, your business can track complaints with eSurveys and your CRM platform. You and your data partner should use technology and science to solve problems before they become visible to the outside world and create actionable insights to help you address deficiencies and retain business for the long term. Doing so is an effective way to document every step of the process, which is vital if the need for documentation arises. But properly addressing negative situations is only one side of an effective complaint management system. Ensure your software engages satisfied customers to endorse you and elevate your position within an evercrowding and ever-shrinking automotive retail marketplace to capitalize on the missteps of your franchised competitors and generate demand for the outstanding service you provide.

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ANTONIO RAJAN IS THE VICE PRESIDENT OF INDEPENDENT SALES AT DEALERSOCKET AND MANAGES THE INDEPENDENT MARKET. SINCE JOINING IN 2009, HE HAS SPEARHEADED DOUBLE DIGIT REVENUE GROWTH EVERY YEAR AS WELL AS TRANSFORMING AUTOSTAR’S BRAND AND REPUTATION TO BEING THE LEADING DEALER MANAGEMENT SYSTEM FOR INDEPENDENT CAR DEALERSHIPS.

their voices to be heard. Allow customers the sufficient opportunity to present their position and listen patiently. Probe gently for additional information and respond only after the customer has shared his or her story completely. Give a follow-up date and deliver. Don’t tell a customer you’ll call back in a week and then fail to do so. Err on the side of overcommunication. When a decision is made regarding your dealership’s response to a complaint, be thorough in your explanation. Whether the decision is favorable or nonfavorable to the customer, a solid and truthful explanation of the outcome goes a long way. Identify Systematic Failures Having completed pillars one and two, you now have a repository of all customer complaints and their accompanying resolutions. Use that repository data to improve your operation and position your dealership for improved profitability and long-term success. Your data partner should have insightful experts to help you analyze complaint data and to identify not only recurring problems that generate the most customer complaints, but systematic failures and processes to correct them as well. Your data partner should also audit the complaint process to ensure all employees are adhering to the approved complaint management process. Your strategic services representatives should analyze feedback and complaints submitted with the goal of

DEALER’S EDGE

minor complaints don’t fall through the cracks. It also helps you effectively address customer concerns in a timely manner and engage your brand advocates to endorse you online and in the marketplace. We recommend a three-pillar complaint management technology solution that provides customers a channel for their concerns, gives dealers the ability to respond appropriately and helps dealership management identify and address systematic failures. This solution helps dealers protect and improve their online reputations, and connect with customers instantly, before negative reviews are posted and prospects take their business elsewhere. Each of the three pillars is vital to achieving a successful resolution – one that is mutually beneficial to the customer and the dealership. Providing a Channel for Complaints Customers want to know they are important to you, you hear their concerns and those concerns are taken seriously. Giving your customers a channel to express their dissatisfaction and air their grievances is the first step in properly addressing a complaint and saving what could be a profitable long-term relationship with your customer. After the sale, ask for your customers’ thoughts about their experiences at your dealership and for honest feedback about the service you and your team provided. If issues arise, address them promptly to ensure your customers are satisfied when they leave your dealership. Have postcards or documentation readily available that assure customers your dealership’s lines of communication are open. In addition to creating a channel for customer complaints, good complaint management software creates a process that highlights the experiences of satisfied customers. It’s the yin to the complaint’s yang, and a platform for happy customers to share their positive experiences and become ambassadors for your dealership. Respond to Complaints Effectively Dealers that outline an explicitly prescriptive process for responding to customer complaints have the most success. It’s no longer enough to set up a complaint department and let Hank the lot porter deal with the cranky customers. There must be timelines, checkpoints, follow-ups, a clear outline of roles and responsibilities, and predetermined resolution methods. Make your dealership’s complaint threshold crystal clear and determine what complaints require a response and to what degree that response is elevated. From there, decide which issues require the involvement of upper management, as in the case of safety and contractual issues that could become costly issues if/when lawyers get involved. Train, train, train. It’s important that everyone responsible for handling customer complaints at your dealership understand the approved process without exception. Responding to complaints, regardless of the scenario, isn’t a time for employees to go off script or take matters into their own hands. Any variation from the process must be at the direction of leadership personnel. Coach your team to become active listeners. Again, most customers just want

SA F E T Y WATCH

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SERVNET AUCTION GROUP EXPANDS INTO ILLINOIS GREATER ROCKFORD AUTO AUCTION JOINS SERVNET

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ServNet has added a new member, expanding its reach into Illinois. The latest to join the independent auction group is Greater Rockford Auto Auction, which is now in its third generation of ownership by the Clark family that founded it. ServNet president Patty Stanley announced the addition at the recent ServNet Owners meeting in Dallas. “I am extremely pleased to welcome the Greater Rockford Auto Auction to ServNet,” Stanley said. “The Clark family, and the auction they have operated for more than 40 years, are highly regarded, and are known throughout the region for their dedication to their customers, high standards of service and commitment to the industry. “We look forward to working

with Mark and Ryan Clark and the auction staff to build an even stronger presence in one of the country’s leading automotive markets.” Greater Rockford has grown from a two-lane sale to the six-lane, 35-acre auction it is today, a path that includes a move to its current location in 1993 and the opening of a new reconditioning facility earlier this year. In addition to its six lanes and recon services, the auction also offers on-site mechanical

BY AUTO REMARKETING STAFF

services, inspections, transportation, simulcast and an in-house floor plan program. The auction’s location in Rockford, Ill., is less than 100 miles from Chicago, Milwaukee, and Madison, Wis., and is about two hours from the Quad Cities area of Iowa. “As an independent, familyowned auction ourselves, we are excited to join forces with ServNet and are pleased to be part of a group that has distinguished itself as a leading voice in the auto auction industry,” said owner Mark Clark. “We are looking forward to deepening our relationships with the other auctions in the group as well as with remarketers across the country as we continue to grow our business and provide greater services to our customers.”

GM RECALLS MALIBUS FOR SHIFT ISSUES INDICATOR COULD ILLUMINATE INCORRECT POSITION

General Motors LLC is recalling 3,690 model year 2013 Chevrolet Malibu vehicles manufactured April 10, 2012, to Aug. 2, 2012. In the affected vehicles, the console transmission gear selection indicator may not illuminate the shift position selected. As such, these vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard No. 102, “Transmission Shift Position Sequence, Starter Interlock, and Transmission Braking Effect.” If the console shift indicator does not illuminate the transmission gear selection, a driver could inadvertently select a transmission position other than the position the driver intended, increasing the risk of a crash. GM has notified owners, and dealers will replace the transmission gear selection control module, free of charge. The recall began on April 20. GM’s number for this recall is 12162.

COMP L I A NCE OV ERDRI V E

Bouncers at the Barbecue

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RED FLAGS, OFAC AND FORM 8300

Summer is finally here. It’s that time of year when we find ourselves surrounded by friends and family at the cabin or at home around the grill. Unfortunately, sometimes an unexpected (and usually uninvited) guest shows up that you’ve never heard of. When you meet, you’re not sure if you should relax or hide your valuables! At the auto dealership, you need to go beyond backyard handshakes. You need to know that when you do business with your customers they are who they say they are. In this installment of Compliance Overdrive, we’ll chew on red flags, Office of Foreign Assets Control (OFAC) and money laundering reporting requirements. They essentially act as the “bouncers” at your party and are designed to prevent you from doing business with dishonest people, such as identity thieves, people the U.S. government prohibits us from doing business with and money launderers. You don’t want them at your party and you don’t want to sell them a vehicle. The Federal Trade Commission’s “Red Flags” Rule (16 Code of Federal Regulations 681) requires creditors to create

programs to identify patterns, practices or activities that indicate possible identity theft. Generally, programs need to include reasonable policies and procedures to: (1) identify relevant “red flags” (patterns, practices and activities indicating a credit applicant might not be who she/he says she/he is); (2) determine ways to detect red flags; (3) determine appropriate responses to red flags when they are detected; and (4) provide for periodic updating of the Identity Theft Prevention Program. The program needs to be approved by your board of directors or a committee of the board. It also needs the board, a committee of the board or designated senior manager to oversee the program development, implementation and administration. You must also require staff training with periodic refreshers. And finally, it should include oversight of your service providers. Identifying and avoiding potential identity theft at an early stage can save your dealership money and time. Frankly, in today’s market, a dealership should have a Red Flags program even if it wasn’t required. It’s simply a good business practice. So take time this summer to review your Red Flags Program. Make sure it’s up to date and that everyone in your dealership is following it. Dealerships are prohibited from doing business with individuals and entities on a special list published by the U.S. Treasury Department’s Office of Foreign Assets Control. OFAC publishes and continually updates a list of these blocked individuals and businesses (“Specially Designated Nationals” or “SDNs”) as part of Treasury’s Sanction Programs. On its website, Treasury describes the list as “individuals and companies owned or controlled by, or acting on behalf of, targeted countries.” It also lists “individuals, groups and entities, such as terrorists and narcotics traffickers designated

under programs that are not country-specific.” By presidential executive order, their assets are blocked and people in the U.S. are prohibited from doing business with them. As part of your dealership’s compliance program, you should always check a potential buyer’s name against the current OFAC SDN list. The list changes with some regularity, so your process needs to include a way to make sure you are checking against the most current list. You can check the list manually by using the list on OFAC’s website or use commercially available software. Note that before you block a transaction, make sure the potential buyer not only exactly matches a name on the list, but also matches a number of other identifying information provided by OFAC for that person or business. The Treasury’s website “Resource Center – Sanctions” page has a step-by-step process to help you determine when you have a quality SDN match and should call the OFAC Hotline. Obviously, doing business with an SDN is illegal. It can also be very damaging to your dealership’s reputation. Consider reviewing your OFAC policies and procedures to ensure you are following the requirements and reviewing every customer and employee. Make sure you are always using the most current OFAC list. Federal law also requires certain transaction information be reported to the IRS and the Financial Crimes Enforcement Network (FinCen). Generally, when a business receives more than $10,000 in cash (U.S. or other currency) in one or more related transactions, the business must file IRS Form 8300. Any transactions you conduct with the same customer within a 24-hour period are considered “related transactions.” The requirement is designed to help the government identify possible money laundering of currency obtained through illegal acts or terrorist activities. There are many different scenarios that

BY CHIP ZYVOLOSKI

NOW IS A GOOD TIME TO REVIEW YOUR POLICIES AND PROCEDURES FOR IRS FORM 8300 TO ENSURE YOUR DEALERSHIP HAS AT LEAST ONE OR TWO EMPLOYEES WHO ARE FAMILIAR WITH THE VARIOUS POSSIBLE SCENARIOS AND CAN CORRECTLY RESPOND WHEN THEY OCCUR. might require you to complete IRS Form 8300 and several exceptions from coverage, which are outlined in the document. It’s important for your dealership to have policies and procedures in place so that IRS Form 8300 is completed when required. Failing to file Form 8300 when required is illegal. And again, it would be damaging to your dealership’s reputation if became known that you failed to report large currency transactions. Now is a good time to review your policies and procedures for IRS Form 8300 to ensure your dealership has at least one or two employees who are familiar with the various possible scenarios and can correctly respond when they occur. The Red Flags Rule, OFAC check and Form 8300 requirements are not new, but they are critical tools in the ongoing battle against financial crimes, including terrorism. Use these “bouncers” to keep untrustworthy people from ruining your dealership’s summer business. CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.