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An Interview with Kelly Price

An Interview with Kelly Price

When you talk to Kelly Price, it is immediately evident that she truly cares about people. Price says keeping things personal as well as professional, acknowledging the hard work of agents and their dealers and focusing on clear communication all lay the foundation for a successful business. Though the company has grown year-over-year with some of the largest agencies in the country, Price is very proud of the fact that at National Automotive Experts (NAE), they don’t have hundreds of agents out marketing their products. “We have dedicated agencies that allow us to help them grow and we are committed to their success.  We love sitting next to them in the dealership to help them obtain, retain and service their business. Selling the car is only the beginning. Keeping the customer for life is the goal.”

There is a lot going on lately at NAE. Price says they are looking forward to several new initiatives in the next six months related to technology, product growth and more. She is also very excited about their new 56,000 square foot building that is being remodeled. The company will move in the fourth quarter of 2014. The new building will allow for a 4,000 square foot state-of-the-art training center, which will be used for F&I and sales training. In addition, they plan to make the space available for hosting community events. “In the past year,” adds Price, “we launched the RV Warranty Forever™ program, which has been a huge success. We will also be launching our new Shortfall™ program in October. If you ask our agents, probably our biggest development is the ability to create and launch a program that they bring to us, giving them the ability to meet the dealers’ needs and wants.”

Industry Roots

Price was raised on an RV lot and says she always loved the atmosphere. When she started selling cars, she quickly realized her infatuation was with the finance office and reinsurance. “What was lacking at the time in our dealerships was communication and customer service with our provider. I knew there had to be a better way to communicate and provide excellent customer service with full disclosure – not trying to figure out what was under the rock – and take care of the end user, the contract holder.” Price says she was lucky to learn from several solid industry icons. She took what they taught her and applied it to develop valuable products and top-notch administrative services.

Family

Those who know Price know work is her life. “I love what I do,” she says, “I love being available to my team and our agency and dealership clients.” When she is at home, she enjoys spending time with family – attending her younger son’s baseball and basketball games and watching her older son’s theater productions. He is a set designer and technical director at his college. Price says she is fortunate to have a family who understands that what she does at the office allows them to be able to support charities as well as the families of those she employs. Price describes her husband as “totally amazing” and “one of the most supportive and loving people” she knows. “He never questions when I have to work and often makes sure that my coffee and breakfast are ready to go in the morning.” She and her husband enjoy being together at what she says is their “favorite place on earth,” the Chautauqua Institution – a 750-acre summer community located in southwestern New York on Chautauqua Lake.  “We go there any chance we get…it is perfect since it is only two hours from our house!”

Price says the driving force behind all of her hard work is supporting the Cleveland Christian Home – a haven of hope and healing for children, youth and families struggling with mental illness, abuse and neglect. It is a charity that both Price’s family and company are very much involved with. “Without a supportive family like I have, none of this would be possible,” says Price, “And of course, God is the true gift in our lives.”

Industry Issues and the Secret to Success

Striking a balance between regulation and allowing the freedom simply to do business is an issue that Price thinks the industry has to deal with before it becomes too costly. “I think regulation is good, but it is getting to be a full time job,” says Price, “I understand that the industry has caused some of its own pain, but realistically, it is a few bad apples that have hurt us all. One of the biggest causes of concern that I hear from our agents is about banks and manufacturers that continue to tie unit allocation and other incentives to the offering of their products. I think this is what the regulators should be looking at.”

Price describes the way to succeed as service, service, service. She says you have to dig in and make sure your dealers are getting the best service possible. “Pay attention to your clients, make sure their needs are met and that you are continually looking for products and companies that do what they say, when they say. Watch for hidden agendas and fees. Some things look great on the surface until you pull away the layers.”

Genuine appreciation and gratitude are both characteristics that Price exudes when talking about the individuals who make up NAE. Price says she is grateful for her employees’ unparalleled dedication to the company culture and mission. “They make sure our customers are happy. I would like to thank our 95-plus employees and everyone who has supported us and has helped make us one of the fastest growing companies in the industry. Without them, none of this is possible.”

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Top Agents Talk About PVR

Top Agents Talk About PVR

Per vehicle retail (PVR) has long been the measuring stick of F&I success.  While it is a useful tool, it clearly does not tell the whole story. In the simplest terms, PVR – also referred to as per retail unit (PRU) – consists of two components: finance or lease reserve and the profit from F&I products. Randy Crisorio, president and CEO, United Development Systems, Inc. (UDS), describes it this way, “The most common formula for PVR is to take all the vehicles and all the income divided by the number of vehicles that were delivered and come up with an average. One of the most common averages is $1000 PVR/PRU.”

In the last few decades, PVR numbers have seen a great change. Today, numbers are significantly higher than they were in the past. Mike Conley, CEO, Conley Insurance Group, says things are much different now than when he got started 25 years ago. “Stores that were producing $500 per vehicle were considered to be well performing. In the last decade, this number snuck up to $1000 per vehicle. Now the new normal seems to be a goal of $1500 per retail.”

Other top agents we spoke with stated similar ranges for today’s typical PVR. Michael Tuno, president, World Class Dealer Services, Inc., says they do not like to see anything under $1,000 for PVR, regardless of the manufacturer. Glen Tuscan, president, Dealer Commitment Services describes a solid number for his stores as $1,200 PVR with a maximum of 40% of reserve in that number.

Depending upon the area and the dealership, John Peterson, president, The Oak Group, lists a typical range of PVR from $1,000 – $1,800 or even as high as 1,900. He believes the most important thing in attaining the maximum PVR is doing things properly – in a compliant fashion and having the accountability that allows for tracking using electronic reports.

Data Tracking Systems – Invaluable Tool or Unnecessary Expense?

Many agents take advantage of tracking or reporting software that is readily available through a variety of industry sources. The software allows data to be broken down in many ways, providing detailed information about everything from the individual performance of F&I and sales managers to specifics on each F&I product sold and PVR excluding lease and fleet vehicles. The data is mainly taken from DMS and menu systems and broken down into specific categories – all of which can be viewed in real time by the agent.

Some agents, such as Crisorio, say the reporting software is worth every penny. If you can’t show exactly how each F&I manager is performing and gather information about each product sale, you can’t use the information to improve things. He also views the real time availability of data as vital. “We don’t want to get to the end of the month and it be an autopsy. If performance died three weeks ago and you don’t find out until the end of the month, you are dead in the water. Once the month is gone, you can’t recover the money. In my opinion, awareness is the biggest piece of PVR. Setting expectations and having ready awareness is one of the pathways to success in F&I.” UDS has used tracking software for over 12 years and before that Crisorio did it manually. In the old days, calculations were done manually by the F&I manager and given to the agent. Crisorio says he would then actually draw graphs by hand and Xerox and distribute them each month.

Peterson too, feels electronic reporting is absolutely necessary. “You can’t improve something you can’t measure. Having the processes and taking accurate measurements is very important. If a dealer is not achieving the desired PVR, there is great value in being able to determine the reason why – is it the lack of sales of a particular product or perhaps it is a particular person who is underperforming.”

Other agents view reporting software or tracking systems as beneficial, but not essential. To fully realize the benefits of the system, complete dealer buy-in is a must and not all dealers want to use the systems. Some dealers fail to use it consistently and others use it improperly. In some cases, an agent may view a smaller dealership as not being worth the cost of utilizing such software.

Conley says he has dealerships that are just as successful without utilizing tracking software as other dealerships that do use the tracking software. “It is a great tool but is an awfully expensive way to get information that should be provided as a part of the DMS. The information it provides is readily available on the DMS but it is not as easy to access. The benefit of the software is that it is an automated process. The data from each day is emailed to agents nightly, allowing them to keep a close watch on everything that is going on inside the dealership. They get addicted to having that up to the minute reporting emailed to them daily. It is a beneficial tool but a good F&I manager is going to be a good F&I manager regardless.”

Another potential downside with the reporting software is the time the agent must devote in order to take full advantage of the software’s numerous capabilities. Conley says some dealers who are particularly computer savvy produce their own reports, obtaining the data directly from the DMS. Is the answer simply taking the time to teach dealers how to extract data from the DMS and put it into a report? Would that make the need for costly software unnecessary? Conley thinks that is at least part of the problem. He says agents can be lazy in helping dealers to effectively write a report. Perhaps if they devoted the time to do this, the reporting software would not be an issue.

Analyzing PVR

There are additional ways PVR can be broken down. The first is to look at products per retail unit (PPRU). This is described as a good measure of where the metric PVR ultimately needs to be – and whether or not it is healthy. The numbers we heard for achieving a solid PPRU were two to three products per vehicle. Another is profit per financed retail unit (PFRU). This is a good indicator of whether a dealership is relying too heavily on reserve – or not enough.

Using their reporting software, Crisorio says the first value they use is lease and fleet excluded. He refers to this as true retail. The next is lease per retail unit. On a lease transaction, the customer is usually sold on a monthly payment before entering the F&I office. Historically, finance managers have pushed lease deals away because they could not make the big finance reserve. With leases at an all time high – currently making up nearly 30% of sales – lease deals are now more important than ever.

Another reason to use tracking software is that it provides the ability to determine when a system is followed and when it is not – thus letting the agent identify exactly where a problem is, so it can be targeted and corrected. “Being able to track it is critically important,” says John Braganini, principal of Great Lakes Companies, “The ultimate goal is to identify situations and issues within the dealership that can be corrected in order to bring the PRU back up to where the dealership wants it to be.”

The results from the tracking software provide a good picture of what an F&I manager is doing and not doing. For example, if all the products are being presented on a menu, they are kept in the deal folders. The reports will show if a menu was properly presented. Crisorio explained, “The menu is presented in three pieces and there is a date and time stamp on each piece. First, there is the presentation piece and then the final piece shows what they bought and didn’t buy. If the final piece is run 13 seconds after the first part, then all of this was done without a menu. The audits prove invaluable in looking for individuals who undermine or distort the selling system.”

If someone is underperforming then the answer may be to enroll him or her in the next training school. This is the standard recourse according to Crisorio, “We want to make sure we are supporting them in every way, because we don’t make a dime until something gets sold. They don’t send us checks every month because they like us. If they don’t sell any products, we don’t make any money.” They offer regular live training as well as webinars, UDS TV, a partner portal and F&I tip of the week – all to provide constant support and keep F&I managers performing at their best. As a rule, Crisorio says their objective is to make a star out of the F&I manager. By doing this, they will earn more; stay in that role longer and the dealer will be more profitable. This, of course will result in a long-term relationship with the agent – who will ultimately be rewarded for the performance of the F&I manager.

Braganini has F&I managers utilize a self-reporting tool as part of their data management system. On the deals where all the subprocesses were conducted properly, he reports a significantly greater PRU.

Training

All agents agreed that training is extremely important – and even more beneficial when it can be used after targeting those who most need it and utilizing the data provided about the breakdown of PVR. “Training, whether online, in-store or in classroom is essential,” says Conley, “For most of our clients, the products we sell are not as important as the training we offer.  Our clients rely on us to help them maximize profit, but to do so in a consumer friendly and legally compliant way.  Without ongoing training and continuous commitment to improvement, the ‘new normal’ cannot be realized.”

Tuscan says when it comes to PVR, his focus is strictly on F&I type products and he is cautious when he sees PVR numbers listed in the $1,300 – $1500 range. “I have seen people boast of record numbers out there and as I see those numbers, I question if they are real F&I products or if they include aftermarket, accessory-type products. I don’t focus on after market type accessories that would be added into F&I numbers – accessories being window tint, clear mask and those types of items, which simply are not F&I products. Those are accessories.”

Braganini referred to another management approach known as throughput analysis – looking at only how many units were sold and how many dollars were generated at the end of the month, without managing the process or breaking down the data. “You have to basically guess at what to do to change it the next month or you have to live with it. I have never been a fan of this because you are going to guess wrong most of the time. I would rather track each step in the sales process.”

Maximizing Profits and Working with the Sales Department

To truly maximize profits, the F&I office and the sales team need to share common goals and work together to achieve them. This relationship is very important in maximizing PVR. Customers tend to be very guarded about committing additional time in a dealership, once they have decided to purchase a vehicle. For this reason, it is imperative that the sales department breaks the ice by properly setting customers up, educating them about all the features and benefits of their new vehicle and pointing out the areas that are not protected. This way, they allow for a seamless handover to the F&I office. “To maximize F&I income,” says Braganini, “you have to have both departments working together and often, they just don’t do a very good job of it because they have different objectives.”

Explaining the features of a vehicle’s smart key and it’s replacement cost to a consumer who’s trade in had a key that could be copied cheaply at a hardware store, is an important part of making the consumer aware of the potential cost of replacing that new $600 key with a computer chip. By doing this, the sales person provides a perfect set up for F&I to offer key replacement and for the customer to see its value. It is the same with other products. As the sales department educates consumers of the features and benefits of their new car and the customer sees what is not covered, the F&I department can then come to the rescue by offering products to completely wrap the new vehicle in protection.

To say a new car has “bumper-to-bumper” warranty, simply is not true. Tuno says using this term is just plain lazy. “Cars typically come with six to eight different warranties on the battery, tires, paint, etc. and that needs to be clearly explained to the customer. Then we can explain the value and the convenience of what we call a warranty-guarantee program – which is really prepaid maintenance – because if you don’t change your oil and maintain that vehicle, the manufacturer will not cover you for any of that warranty. If two wheels can cost a thousand dollars each to replace and the customer is under the impression that they have a three year, bumper to bumper warranty, their mindset is ‘Great, I don’t have to worry about anything.’ It’s not a question of worrying, it’s ‘these are your driving habits and these are your driving needs – what’s going to be important to you over the course of your ownership?’ And there’s no shortage of products to take care of their needs.”

Other factors that come into play involving the sales department are desking compliance, how the customer is handed over to F&I and the delivery conditions of the vehicle. Some agents pointed out the importance of not using the F&I department to close too many deals. This responsibility requires a realistic sales manager. If he isn’t, the dealer has to make the decision to let the practice continue or not. If a customer wants unreasonable financial terms, a decision must be made as to what percentage of sales are acceptable being turned over to the F&I office to close the deal. A reasonable estimate might be that 90% of people coming into a dealership to buy a car have a pretty good idea of what they can buy on a monthly budget or on a pricing schedule. Therefore, using the F&I office to close deals probably should not occur in more than 10% of deals.

The turnover – how the customer is introduced and greeted, and the time it takes to get into the F&I office, affect a customer’s mood and attitude. Also, the delivery conditions are significant. Having everything ready to go when the customer comes in to pick up the vehicle and handling the exit interview professionally are both key factors that require a good working relationship and common goals between F&I and the sales department. Braganini noted, “You have a better chance to increase PVR if the customer does not come in and have to wait for a long time. It puts the customer in a sour mood if paperwork is not completed after two hours and their car is not ready.”

The sales manager can take the lead by establishing a process for how customers are turned over to F&I. By making it clear when hiring sales people that they are expected to introduce customers to the finance manager at the point of sale – without exception – they can lay a foundation that will prevent this from becoming an issue at all.

Tuno says the people who are really good at it manage the process, train their people, have talent and have consistent pay plans that push both sales and F&I departments in the right direction. “Pay plans ultimately are job descriptions. The one that is the killer is if we just give them 10% of the whole department. What is forcing F&I departments to sell F&I products in that environment, when the desk is giving them 70% of their income from reserve? The answer is nothing. It’s just human nature.”

Peterson says that having a good pay plan along with goal setting clearly lets people know what is expected of them. He lists the four keys to success in F&I and pointed out that they carry over to all professions: goal setting, accountability, education and compliance.

Having a well rounded offering of products and being very good with all your products is also a foundational part of ensuring a top performance according to the top agents we spoke with. To maximize PVR, an agent must be able to present the products that best fit the customer’s needs – whether it is a cash, lease or finance deal – both at high-end and lower-end dealerships. We will analyze the importance of product offerings, and all the dynamics involved, in detail in a follow up article.

Advice for the Future

As F&I becomes an increasingly critical piece of a dealership’s profitability, the challenge is not only maintaining a healthy PRU, but also for the F&I office to take steps to ensure they are not on the slippery slope that regulators are sure to focus on. Just as caution needs to be taken in pricing interest rates, consistent pricing of F&I products may be the next shoe to fall. Tuno says the abusive practices of charging a customer $1995 for a product that actually costs $100 are gone. He says the footnote to making sure you are achieving a good PVR and doing a robust amount of product sales is to price consistently. “This will keep you out of harm’s way and ensure that you have not abused or intentionally caused protected classes to have to pay more for a product. You can go to any number of regulatory workshops and learn that pricing products consistently is a best practice. But dealers are their own worst enemy.”

Peterson also emphasizes the importance of accountability. He says with all the regulations out there now – CFPB, Dodd Frank, etc. – being able to measure performance becomes imperative in maintaining accountability.

Clearly, the advice from these top agents can be summed up as: be aware, manage the process through detailed reporting, ensure a good working relationship between sales and F&I, train your people well, offer a wide array of products and know them all, and don’t view any deal as a throw away deal. Tuscan concludes, “You have to have total focus and the same commitment to each different type of buyer as well as a solid, well rounded product offering. That, to me is how you will achieve a solid number for PVR.”

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NADA Puts Biweekly Payment Providers in the Spotlight

NADA Puts Biweekly Payment Providers in the Spotlight

In May, NADA issued a memo stating that it had come to their attention that the FTC had recently issued civil investigative demands to dealers in connections with bi-weekly payment programs in the F&I office. They advised dealers to “exercise caution when offering such products to their F&I customers,” and gave an example of a 60-month auto loan in the amount of $27,342.96 financed at 8% over 60 months. The results were cited as a five-month reduction in term and an overall savings to the customer, after fees, of only $43.11. The NADA stated that, “Any situation where a dealer is offering a product of marginal value creates a risk that the product will be heavily scrutinized.” The memo stated, “If accurately presented to your customers, with full disclosure of the costs and optional nature of the product, such bi-weekly payment plans are not inherently ‘illegal’ or noncompliant with federal law. As with any other product or service, however, if presented to consumers improperly, or in a misleading fashion, dealers could face numerous compliance risks.” It went on to say that biweekly products can be “particularly susceptible to UDAP (unfair or deceptive acts or practices)” because the costs of the program can easily exceed the potential benefits.

Citing the example of the loan with only $43.11 in savings to the customer, the NADA pointed out that if F&I personnel had promoted the program as offering “substantial savings” or used similar wording, then it could be viewed as an unfair or deceptive practice. They warned that the program’s benefits not be overstated by F&I personnel. The sole customer benefit of biweekly programs cited by the NADA in their memo was interest savings.

Needless to say, biweekly providers were immediately on the defense. David Engleman, CEO, SMART Payment Plan, says the most disappointing thing was the NADA’s neglect in doing proper research and due diligence. He says the true and accurate facts were not presented in their memo. “We want to make sure that all of the dealers who are selling SMART are being compliant. We provide thorough training and full disclosure of fees. It is disappointing that the NADA wouldn’t have reached out to ANY company in order to review sales and marketing materials, contracts, etc., before issuing an advisory or opinion memo regarding a service.” Engleman says dealers should expect more from the NADA – including accurate portrayal of facts and conducting necessary research before issuing legal and regulatory opinions.

Engleman, along with Michael Hull, CEO, Equity 4 U, Inc., Lynn Simmons, president, Economic Advantages Corporation, and Robert Steenbergh, CEO, US Equity Advantage, – none of whom had been contacted by the FTC – issued a joint response stating that the NADA memo “raised undue alarm” and missed much of the true value of their services, such as “convenience, ease of budgeting, improved cash flow, faster loan payoff, reduced negative equity, the elimination of late fees and the significant interest savings when consumers add additional loan payments.” In addition, the providers were upset by the NADA’s failure to communicate with any of them prior to issuing the memorandum.

In a separate letter to the NADA, Hull states that the NADA’s omission of the full benefits of the program greatly skew the decision making process for the dealer. His letter states, “If I were a dealer with average knowledge of biweekly payments or payment acceleration, I would believe the only net benefit, as you [the NADA] stated, is interest savings. If that were the case, then I wholeheartedly agree it [would be] difficult to find a positive net benefit for every customer.” He goes on to say that fortunately, their customers and partners “understand the FULL benefits of the program, which includes a better equity position.”

All the Benefits of Biweekly…

Simmons says, “The original memorandum really did not do justice to our industry. Everyone agrees that the NADA did not do any due diligence. Their memo just made people nervous! Nobody needs that. …This is a great product and a revenue generator. There is no reason to stop selling it. As long as you do your job and disclose things properly, there is no problem.” Economic Advantages Corporation issued their own letter to the NADA and Simmons listed the following additional benefits omitted by NADA:

  • Accelerated equity – significant reduction in the loan amount due at payoff
  • Automated payments – offering the consumer an easy, effortless payment method
  • Increased trade-in value – resulting from earlier payoff, reduced wear and tear and less mileage
  • Flexible budgeting – smaller periodic debits which can be customized as needed
  • Structured discipline – ensures timely payment which can improve credit standing
  • Customer support – professional service reps who assist the customer in communicating with their lender, with which they often do not have the experience
  • Online account access – enabling the customer to track their payments and easily communicate with the company day or night
  • Additional debt – ability to add mortgage, credit card, student loan and other debt types for even greater savings and convenience

While the companies are referred to as “biweekly” payment programs, Simmons pointed out that in reality, biweekly providers tailor their services to the customer’s preference. “We can debit our clients on any schedule they like – whether its weekly, twice monthly, monthly, or biweekly. It started out many, many years ago as a biweekly product but it has evolved – the name just stuck.”

Engleman pointed out that 80% of Americans get paid weekly, biweekly or twice a month. “There have been three recent surveys that indicate that up to 77% of Americans are living payday-to-payday. Understanding that makes it obvious why a service that matches bill payment to a payday would be so popular. It’s the convenience, the ease of budgeting, and the improved cash flow that makes our service popular with Americans. It’s not interest savings! Interest savings is one of about ten benefits and not the most important one. When we survey our clients, not a single client has ever responded that interest savings was important to them or that savings was a factor in the enrollment in our services. The overwhelming service from our clients is that they love our service – and they use the term ‘love’ – for the convenience, ease of budgeting and improved cash flow.” As an example, he explains that the average American makes $4000 a month. They receive a paycheck for $2000 at the beginning of the month and another one in the middle of the month. The government takes $500. The average rent or mortgage is $1000. The average car payment is $400. Often times those are both due at the first of the month, leaving the individual with only $100 left to live on after paying those bills, until their next paycheck. “People are not buying interest savings, they are buying ease of budgeting and convenience and cash flow.”

Biweekly customers can reap even greater benefits by rolling additional outstanding loans into the program they enroll in with their auto loan. Hull says, “Think about your home. Imagine that you are using a biweekly payment schedule and decide to sell your house and move after ten years. At that point, because of your biweekly payments, you will have thousands of dollars more available to you when you sell your home and repurchase a new one. You can either buy a similar home for less money or you can buy a bigger house. The same goes for cars. In five years imagine you trade in a vehicle that you still owe a couple of thousand dollars on. If you had not been on the biweekly program, you might have owed four to five thousand! That’s a huge equity benefit.”

Training and Compliance

The one thing that biweekly providers all emphatically agreed with was the NADA’s recommendation for proper training of F&I personnel and the importance of adequate disclosure. In fact, the biweekly providers we spoke with say they already go above and beyond in this area. Steenbergh says their focus on compliance is top priority. “There are no hidden fees whatsoever. We don’t apologize that we charge a fee for our service. There is no reason to hide it.” He reports they comply with all 50 states’ licensing laws and are registered with Financial Crimes Enforcement Network (FinCEN), which is a federal regulatory agency. They passed internal audits by the MSD compliance divisions of their banking partners, comply with all federal bank secrecy acts and anti-money laundering statutes, which are required by the state licensing authorities as well. In addition, they have operated with externally audited financials for a number of years. Steenbergh says, “We are not afraid of anyone challenging whether or not we do something in an honest and compliant manner because we think that is a competitive advantage for us. We don’t spend all this money on licenses and compliance because it is an income source!”

As far as dealership training, the biweekly providers we spoke with take that very seriously also. Steenbergh says maintaining control of the training is a important part of keeping things consistent and teaching the importance of disclosures and compliance to dealers. “We don’t have other people train our dealers. Even though we work with agents across the country, we send our own people in to do the actual dealership training. This ensures that it is done in a compliant manner and that each training is the same as the last. Our trainers work with dealers on the proper way to present the program, how to handle objections, and they specifically tell them how NOT to present it.”

Michael Lickfeld, vice president, Lawly Automotive in New York has been doing field training for Equity 4 U for almost nine years. He says he has never had any calls from the BBB, attorney letters, lawsuits or other problems since he has been selling Equity 4 U’s products. When training dealers, he takes the F&I chair and gives the presentation to the F&I manager as if they were the customer, going through every step of the process, including fees and benefits and highlighting key areas on the paperwork. He returns to his dealers one to four times per month, depending upon their size, to conduct ongoing training. On these follow up visits, he sits in the customer chair and has the F&I manager present to him. He provides tips and ensures they are fully and accurately representing the product. Lickfeld says the key is, “putting yourself in the customers place – or view them as if they were your mom or dad or a relative. How would you treat them? You have to make them aware that there are fees and there are benefits and fully explain both to the customer. You are putting them in an accelerated equity position on their loan.”

Rick Christopher, regional account manager, US Equity, did business with US Equity for eight years before working for them. He says he never had any customer or dealership issues, such as customers not knowing what they were getting once they signed up, or problems with the program once they were enrolled. He says there is no way an F&I manager can overstate the benefits if they use the tools provided to them. “When we train – new accounts or new F&I managers, we stress full disclosure, especially of fees. We want the customer to understand that the benefits far outweigh the fees. All the fees are on our disclosure form in bold. I train F&I managers to have customers actually initial fees section of the enrollment form as a best practice. We stress for them not to overstate the benefits of the program because we have a tool on our website and a tool in MenuVantage that states the benefits to the customer very clearly in a printable format. This includes the interest savings (if there is any), the additional equity they will have available to them in 42 months, and the term reduction on the loan if they stay on the program. It shows the customer clearly what their savings will be after the $399 enrollment fee.”

“I think what’s important here, is we really are no different than any other product in the marketplace,” says Simmons, “With any product F&I sells, it’s up to them to present it properly and it’s up to the provider to train F&I to present it properly. We make sure our agents are well aware of how our product works and then together with the agents we work to keep the dealers educated on our product.”

All the providers we spoke with conduct regular training – in person and online with webinars and tutorials. They provide training materials and offer online and phone support for dealers as well as customers and have a variety of calculators, tools, debit calendars and account information on their websites. Their goal is having customers for life. They emphasize providing quality customer service in order to earn long-term business from their customers.

A Silver Lining?

While no reputable company enjoys having to defend itself against accusations that they are not operating above board in their business practices, the biweekly providers we spoke with are being positive in light of the recent press they have received due to the NADA’s memorandum. They say they are using the opportunity of being put in the spotlight to refocus and to share the benefits of their products within the F&I industry. “Equity 4 U and the other providers,” says Hull, “have been providing payment acceleration services for over a decade, with predominantly positive customer feedback. We know how to sell, train and market the services because we have the experience to do it. If the FTC or for that matter, NADA has any input as to the process of biweekly payments, I would be more than happy to listen and makereasonablemodifications to our services.”

Hull says they are using the opportunity to refocus and reinforce the items that need to be brought up so the customer has an accurate understanding of the services they are signed up for – even with their experienced F&I managers – to ensure that nothing has fallen through the cracks. “I don’t think anyone is out there intentionally misleading anyone. A lot of the principles that are inherent with our program are not new. People have been doing this with their mortgages for decades and biweekly has been offered at the dealership level for over a decade.”

Engleman say that if anything, the NADA has provided a podium to inform the marketplace of the very important and critical details of their service. “It is what it is,” says Engleman, “We at SMART do not want to focus on the NADA memo. We are very happy that we are getting the press and the media attention. It gives us opportunities to discuss all the facts, the details of our program, our focus on compliance, adequate training, and accurate fee and benefit disclosures.”

At the end of the day, while they disagree with the recent memo, Engleman says reputable biweekly payment services are directly aligned with the NADA’s ultimate goal. “We want dealers to be compliant, we want them to use legal, compliant sales practices and we want to make it possible for car buyers to interact with dealers in a high trust environment and to be able to buy vehicles, products and services that make it easier to own vehicles and help those buyers return to dealers in a more right-side up position.” So despite the reason biweekly payment services were put in the spotlight, he views it as an “opportunity for the industry as a whole” – to educate dealers about the benefits of their services and to let the industry know just why payment services that align payments with customers pay days are so popular with the public.

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An Interview With Bob Corbin

An Interview With Bob Corbin

IAS has seen tremendous growth under the leadership of its CEO and president, Bob Corbin. As the competitive landscape evolves and traditional service contract providers try to break into the aftermarket product world, Corbin has taken a proactive approach. By purchasing an established, robust service contract company known for their top-notch training, IAS now has a complete F&I solution – offering custom aftermarket technology solutions, turnkey reinsurance, F&I management, a training institute, and a suite of VSC products. And they are doing it all in-house.

Corbin was excited to discuss the newest happenings and offerings at IAS. “We don’t outsource anything,” says Corbin, “We don’t rely on outside vendors or others for our software, or for that matter, anything that we do. We always have complete control over the products and their delivery of the IAS promise – being the complete F&I solution for our agents and dealers.”

Headquartered in Austin, Texas, IAS also has a 40-person, state-of-the-art training center in Oklahoma City and administrative offices in Dublin, Ohio. Corbin describes the training company they recently acquired, First Dealer Resources (FDR) as “one of the industries’ best F&I development and training companies.”  He has known the founder (now president of IAS’s vehicle service contracts), Frank Klaus for over 30 years.  “We could have pursued any privately held VSC company. Frank and First Dealer Resources were first on my list for a couple of reasons. They have a really strong vehicle services contract suite of products for automobile and recreation vehicle dealers, all fully insured by multiple A-rated multi-billion dollar insurance companies. They are also known for their in-store F&I management. They deliver a really high performance for some of the industry’s most profitable F&I operations, and they have developed proven and practical systems and processes that deliver consistent, best of class results for the dealers.” Corbin is proud to say that the students who become certified through their training institute consistently perform in the top 1% in the F&I industry.

In May, Corbin says they introduced “the new IAS” at their first agent conference in South Beach. “Our new executives and business partners made the case for what makes IAS a complete F&I solution,” says Corbin. And because of its success, Corbin says it will likely be the first of what will become an annual agent conference.  Future conferences will likely focus on expanding offerings and solutions, and increasing the penetration of F&I products they currently sell in the F&I department.

Corbin got his start very young, working with a leading VSC company in 1978. “I worked probably every single position in sales and in training prior to being recruited to run IAS as its CEO fourteen years ago.” The thing he likes most about the industry is the people. “It’s just full of highly dynamic, entrepreneurial people. Some people start out as your clients and become very close friends over 20 and 30 years in the industry.”

Corbin credits his family with having a big role in his success. He has been married for 27 years and has a son, 21 and a daughter, 24  – both of whom he says are very active in Austin. His family supports the charities of the Austin Children’s Shelter and the Austin-based Zach Theater, a local theater that raises money for the Dell Children’s Hospital and the Zach Charities.

When he isn’t behind a desk, you might find him knee deep in the everglades. He says his passion for deep sea and backcountry fishing haven’t yet landed him any close encounters with gators but he has managed to catch a few red fish, snook and trout. For Corbin, fishing is the ideal get-away from the day-to-day routine.

In the future, Corbin says he just hopes to keep doing what he is doing. “We’ve really built a great team.  And now with our acquisition, we even have a better team of senior executives, sales and training talent.  I want to continue to develop IAS into a larger and larger, and better and better company.”

Advice for someone new to the industry? Corbin says he learned much from his mentors early on, and was fortunate to have some great ones. He recommends anyone getting started would be well served to do the same. “Find somebody who is willing to mentor you and teach you the industry.  And don’t be afraid to make mistakes. Everybody is going to make mistakes, especially somebody new to the industry. As long as you learn from your mistakes, it’s okay to make them. But most importantly, grab on to a mentor and really learn from that person. That is probably the best advice I could give anybody  – it’s what worked for me. “

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An Interview with Jeremy Lindsey

An Interview with Jeremy Lindsey

In an age where agents and dealerships are bombarded with complex service contract programs, Alpha Warranty Services believes that simple sells. Jeremy Lindsey is the COO for Alpha Warranty Services – a niche vehicle service contract provider offering a full range of coverage options. They set themselves apart from the pack by providing service contract programs with simple yet extensive terms and eligibility rules, combined with comprehensive coverage.

Recognizing that consumers are keeping their cars much longer these days, Alpha Warranty Services extends coverage to higher mileage limits than the industry average. They offer technology that provides their agent partners and dealership clients with unique competitive advantages, such asa native iPhone app allowing agents to see sales and claims up to the minute. Agents can also take advantage of Alpha Warranty Services’ proprietary VantagePoint system, which provides insights on an agent’s business performance.This system shows them up-to-the-minute sales, paid claims, commissions earned, an annual sales comparison, a notification center on over or underperforming accounts, downloadable billing statements, and more. “As a company, we understand that many agent partners come to us already using some standard programs with other providers,” says Lindsey, “We invite them to review our niche service contract programs, as our programs provide a unique revenue stream for them. We say, ‘Bring what you currently offer and let us add to it.’ What we find is that they are so happy with our programs and our service that we see more of their business come over as that trust is built.” Alpha Warranty Services’ goal is to help their agent partners be successful. By focusing on their partners first, they have achieved tremendous success as a company and have been selected as a top service contract provider by the likes of Carsdirect.com and Autos.com.

Lindsey firmly believes if you take care of your employees, that satisfaction carries through to your agent partners, dealership clients, and ultimately your contract holders. “Our success starts with hiring the best employees,” says Lindsey, “and then treating them as a valued asset of our company.” And that isn’t just talk; Alpha Warranty Services was one of the 2013 National Winners of the Alfred P. Sloan Award for Excellence in Workplace Effectiveness and Flexibility.

Growing up in a family that was immersed in the auto industry, it is no surprise that Lindsey ended up working in the field. His grandfather was an F&I manager at GM for nearly his whole life and Lindsey’s father worked in automotive sales for many years. Lindsey says he has always been drawn to cars. In his early 20’s, he started his own dealership. He says he found some great success and learned a lot about the business during that time. He later sold the dealership to his partner and pursued an opportunity with Alpha Warranty Services. “I’ve been with the company since near its infancy. It’s been exciting to see the company achieve such success and provide value for so many great agents and dealerships.”

Lindsey earned a master’s degree in international affairs and global enterprise from the University of Utah. He loves traveling and staying abreast of international issues. He spent two years in Uruguay as a service missionary, teaching English, rebuilding communities and sharing Christian beliefs. “I lived in South America for a little over two years so I speak Spanish as well. Living in South America just grew my love for soccer and for diverse cultures.”

With the World Cup going on right now, Lindsey says he is a pretty happy guy. He is a huge sports fan and loves college football and all things soccer. He has two young children and also enjoys spending time with them. Living in Utah, Lindsey takes advantages of the close proximity of the mountains – snowboarding in the winter and fishing in the summer.

Hot Issues in the Industry Today

Lindsey sees a few big issues for the industry on the horizon. He describes the overreaching of organizations such as the CFPB as a hot topic right now. Resistance to technological change in the industry is another. Finally, the ability to connect with the younger generations, both inside and outside the industry, is something he feels the industry needs to get a better handle on. “Younger generations make up a growing percentage of car buyers,” Lindsey pointed out, “Understanding how these consumers think and what matters most to them is important for success at a provider, agent and dealership level. In addition, young talent working within the walls of automotive dealerships will also have different expectations and perspectives on what will drive success and what tools are necessary to do so. Every generation is different from a general standpoint and connecting with each is important. The responsibility of developing solutions that bridge this gap is on us as providers. We need to be prepared to provide the tools necessary to accomplish this and we need the insight to do so. As a company with some great young talent, we like to believe that we have a good pulse on what’s needed to connect with this growing segment of car buyers, as well as car buyers from all other generations.”

Sage Advice

When asked what advice he would offer to someone just starting a career in the auto industry, Lindsey summed it up in three words: never stop learning. “We have some great trailblazers in this industry who possess so much valuable information. Learn everything you can from them and more importantly, be teachable. Having said that, innovation means considering ideas that might not be commonplace in our industry. The automotive industry and aftermarket automotive industry have developed quite a bit in these last years but there is always more out there. Don’t be afraid to extend yourself beyond your comfort level, as it ultimately will benefit both you and the industry in general.”

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An Interview with Steve Amos

An Interview with Steve Amos

For anyone who has the privilege of spending time with Steve Amos, president and CEO, Gulf States Financial Services (GSFS), one thing is clear – integrity is the foundation on which the company is built. “We operate with a very, very strong set of values – whether it’s working with each other, working with a potential customer or with all our policy holders. Our focus is doing the right thing in all our transactions.” says Amos, “It’s important to us as we live our values everyday.”

GSFS is a national company and is the exclusive provider for Toyota in the Gulf States region. In addition to Toyota, they do business with Chevrolet, Kia, Nissan, Honda, Ford, Chrysler and other manufacturers across the U.S. They also provide extensive compliance and sales training for their dealers. GSFS’s basic product offerings are vehicle service contracts, tire and wheel, GAP, prepaid maintenance, lease VSCs, key replacement, etch, and environmental protection.

As one of the few companies in the industry that is active in all vehicle service contract participation programs, GSFS offers retroactive dealer commissions, NCFC, dealer obligor, dealer owned warranty company, as well as dealer owned CFC or ARCS. “We want to be able to be able to provide the dealer the program that is right for them – and not be limited by what we sell,” stated Amos, “so we offer them all.”

On the Horizon

Amos shared several new products they are offering in 2014. In response to the resurgence in leasing, GSFS launched a new VSC at the beginning of the year, specifically designed for lease vehicles. Amos says it has been extremely well received. In addition, they have recently launched a new lifetime powertrain warranty that will be available nationwide. GSFS is also revising all of its used car programs and launching a prepaid maintenance service drive program designed to be sold exclusively on the service drive.

With technology rapidly changing, those changes are affecting the way business is done – changes that Amos sees as very positive. “We are rapidly moving all our dealers to a paperless environment. We don’t have to send them contracts and they don’t have to send them back to us. They can access all the information on our products and pricing online.” Amos says this is a trend he sees continuing in the future as technology rapidly advances.

Amos says dealers are looking more and more for web-based solutions for how they sell cars and ultimately how they offer the finance and insurance products to consumers. “Its something we’ve got to stay ahead of because when you think about what’s changed, just technology-wise in the last ten years, it is like night and day. Cars are going to be sold on the Internet and F&I products will be sold there, too. We have to ensure our field teams can teach, train and work with dealers so that it becomes an integral part of their business. The real issues challenging everybody are how to present products online, maintain profitability, maintain customer satisfaction and protect the integrity of the sale.”

Executive by Day, Race Car Driver by Night

When Amos is not working, you won’t find him sitting home watching TV. “On days off, I occasionally play a little golf,” says Amos, “but most of the time I’m not working, I spend at the race track.” Amos, who races cars all over the country, also works as a high speed racing instructor for BMW of America, Porsche of America as well as a private race school based out of Texas. “It keeps me busy, but is a good, relaxing way to spend a weekend and get away from the pressures at work.”

Amos says racing is addictive and he got hooked on racing in high school, while living in Europe. “Sports car racing in Europe is like the NFL is here. I got hooked going to the LeMans races and Nurburgring Races and have been in and out of racing most of my life. Ever since I was a little boy, I have always loved cars.”

Growing up with a father in the Air Force, Amos lived all over the world – Alaska, Germany, and the Mojave Desert to name a few places. He graduated from high school in Germany, and moved back to his birthplace of Texas to attend college. Amos describes being an Air Force kid as a good life. He enjoyed living on Air Force Bases and says that it gave him a complete appreciation for the military.

After college, Amos says he was one of the few college grads who went to work selling cars. “I started out selling Pontiacs in Dallas, Texas, and eventually was promoted up to a general manager/ managing partner of a Toyota dealership.” Then all of a sudden, he found himself married with two young sons and wanting more time with them than the retail business allowed, where he regularly worked nights and weekends. “I went on a mission to solve the family issue and I wound up being very fortunate getting in the insurance business and the service contract industry. It was kind of interesting though – soon I found myself traveling 80% of the time, so I was actually gone more – but I was home on weekends and holidays so I felt like it was a fair trade off.” After being in the insurance business for over 20 years, Amos says he never really minded the travel, but now he does not have to do it nearly as much.

A Look at Tomorrow

As he looks at the future of the industry, Amos says the compliance world is here to stay and GSFS thrives on that fact. “There are a lot of unknowns as to what the CFPB is going to do in the years to come and how they are going to regulate things. That’s why our culture is so important to us.” Amos says that GSFS’s goal is to ensure their dealer clients are well in tune with what they need to be doing to be compliant and ethical. Over the years, he says they have learned that if you do those things, you can be very, very successful. “The consumer recognizes and appreciates integrity the moment you sit down to complete an automobile transaction with them. The CFPB, will make us all better at what we do. It won’t affect the people who are transacting business the right way but it will expose those who don’t.”

Amos says that their competitors are also competing on the highest level of integrity. “It’s just a reminder to keep doing what you have done. I could go on and on about all the stuff the CFPB has done but if you think about it, the fact is, their name is Consumer Financial Protection – their interest is in protecting the consumer! And at GSFS, our philosophy is that we have products that are very easily sold and are very easily bought. They provide customers coverage they need when they really need it – so we are in favor of that.”

What advice would Amos give to someone new to the industry? If you get in the industry, stay in it, because it is exciting! “I think the next ten years are probably going to be the most exciting ten years ever in the car business. It is not going to be just the same old thing year after year. There is going to be constant change and constant innovation. Manufacturers are building the most beautiful, well-manufactured cars that they have ever built. You simply need to work hard, keep learning and above all, maintain the utmost integrity in everything you do.”

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