Sunday, February 01, 2004

The Selling Cycle - Part VIII The Write Up

The demo ride is over. The vehicle presentation is complete. You have helped your customer find the right unit. The buying signals are turned on. Now you say "Follow me so I can show you how easy it is to have the _________ you so richly deserve" and proceed to your workstation.

Crunching the Numbers

Regardless of how the customer chooses to pay for the vehicle, there are four parts to sealing the deal: (1) sales price, (2) trade situation, (3) initial or down payment and (4) monthly installments. Whether you refer to this part of the process as a write up, 4- square, 4 corners, or buyer's order, you will work with this 4-part worksheet to establish sales figures, negotiate, and make your deal.

Put it in Ink

The sales manager should be the only person who puts any numbers on the write up. While nothing is 100% certain, most consumers will give you 3 passes. Use red ink for the “should be” figures, blue ink for the second pencil, and green for the third attempt. If you get a 4th pass, add black ink. Since crossed-out figures can be confusing, different colors help you keep track of where you are in the deal, especially when managers are desking multiple deals at once or if the customer needs more than one visit to the dealership to close the deal.

Red Letter Sales Figures

You may well be wondering about using red ink to establish the sales figures when red usually connotes “stop”. The goal is to make the deal unique. In advertising, red ink costs twice as much as black ink. Why? It stands out. And you want the established sales numbers to do just that – stand out and make the deal unique.

Use the power of "Should Be". Although many sales personnel typically use minimal down payment, consumer credit ratings are in decline. So ask for full retail and one-third down. Lenders want equity in each loan, and the best way to achieve that is to ask for one-third down at the outset.

An RV is a luxury purchase. When times are tough a luxury loan is the first loan type to go into default. Consumer equity is essential in order to minimize the lender's loss. Consumer equity makes the deal happen. Asking for it puts you on the road to success.

Blue Book Blues

How we deal with trades changes by the nano second. Most RV customers with open loans are “equity challenged” (experiencing the effect of owing more than the vehicle is worth.) In California, augmenting the sales price to compensate for negative equity increases the sales tax burden and license plate fees for these customers, in addition to the interest on additional fees.

Increasing the sales price to cover equity shortfall is dangerous; some courts view it as an unfair and deceptive business practice and a violation of Regulation Z. The federal government Commentary for Reg. Z specifies that negative equity be noted on the retail installment contract. If your sales manager does not have this publication, you can request a copy from my office. Sales managers should identify negative equity from the beginning.

Gaining Greenbacks

Many of you will ask: How can you discuss monthly payments without a credit review? Good question! Using a "C" tier for the first payment quote, the sales manager should identify both APR and a relatively short term of 120 months or less for smaller units to establish the deal.

Federal law gives consumers the right to obtain basic information on a purchase without benefit of a credit report. In my experience, consumers are reluctant to provide confidential information to a stranger until they have a valid reason to do so.

The higher-than-average APR and "OAC" notation will give the sales consultant a valid reason to obtain a complete credit application from the customer between the sales manager’s first and second pencils. Be conservative when you first establish the deal.

Buying an RV should be a pleasant experience for both the customer and the sales consultant. Neither sales managers nor F&I managers need to desk deals at buy rate. Dealerships are allowed to make a profit in more than one area of the deal.

Doing the Deal

Begin with the sales price, go to the cash-down quadrant, then up to the trade-in, back to the cash down, and proceed to the monthly payments. People remember the last word spoken. 88% of Americans finance their larger purchases. End your financial presentation with the monthly payments. Ask the question and wait for the customer’s response.

When you and your customer are seated, reach for your 4-square, 4 corners, or buyer’s order form. With pen poised to write, ask two questions that will paint a picture of ownership in the customer’s mind: How do you want register the title? Where do you want us to mail your title?

After you identify the unit you are selling and write a basic description of the trade-in, say to your customer: I must excuse myself and check with the manager to see if this unit is still available. Someone may have already placed a deposit on it. Give the customer a copy of your “ Why Buy Here” book. Pick up the deal document and head for the sales manager's workstation.

Go directly to sales manager, ask if the unit is still available, and obtain the first financial presentation.

Return to your workstation & your customers.

Great news! The unit is still available for sale. To purchase this vehicle (review the equipment list) the sales price is $____________. (Do not say thousand(s) of dollars. Use the power of high numbers and low numbers)

For normal conventional financing, most lenders require one-third cash down. In your case, this would be $__________. (Do not say thousand(s) of dollars. Say seventy-one hundred or ______.)

The manager said (s)he saw a vehicle similar to your trade at the auction and it went for $__________ thousand dollars. (Now you want to use the word thousand!) Yours is a little nicer so (s)he is willing to pay you $_____________.

Return to the cash down payment area. This will reduce the cash requirement by $__________ leaving a balance due of $____________ (use hundreds).

Which leaves you with [120] [180] short payments of $_______. How does that sound?"

Timing is critical. The first step is for the sales manager to establish the “Should Be's” in writing so that you can make a verbal disclosure. The second step is discovering which part of the deal is the customer’s main concern in order to obtain a credit application and a full trade interview sheet. The customer’s response will dictate which form to address first. If the concern is trade-in allowance, review the trade interview sheet thoroughly, followed by a complete credit application. Be sure to address your customer’s concern(s) about any part of the deal. Short cutting these steps only shortcuts your paycheck.

Earning the Right To Write

The sales manager should desk all the deals so that the sales consultant is not placed in a confrontational situation with the customer. The negotiations work best with a third party influence that positions the sales consultant as the customer’s advocate.

A professional sales manager will neither insult the customer nor sacrifice sales department gross profit for the F&I department. The sales department gross profit is paramount, as it is never charged back to the dealership. By the same token, a deal is only as good as the ability to secure a lender to fund the balance due. The professional sales manager knows how to structure a deal for funding and how to negotiate the deal through the sales consultant for maximum success. We will address negotiating skills in Part 9.

RV Executive Today, February 2004