This is often the “make or break” time of the year for many dealers. Tax season is the only time that many customers have the disposable income necessary to make a substantial down payment or catch up past due accounts. But as the amount of money thrown around by Uncle Sam grows, so does the scope of the tax refund season.
Fourth quarter sales
Most dealers know how important January and February are, but the most vigilant dealers are going a step further and capitalizing on the coming tax refund tsunami in November and December. Pickup payments have long been a common practice for many dealers. Now, the pickup payments are being tied to the tax refund.
Some tax companies who specialize in the customers of car dealers have set up specific systems and campaigns for the pickup payment process. Using the customer’s most recent pay stub and the ages of their children, a tax refund estimate is produced in less than 60 seconds.
Product testing and past experiences have led to numerous safeguards and processes to protect the dealer’s interest. If you already use pickup payments to move inventory, this is a no-brainer.
First quarter sales
In 2009, the average tax refund reported by Tax Refund Services Tax Max was nearly $4,000. With the new tax law changes in the past 10 months, refunds are expected to average over $5,000.
The traditional tax refund season for car dealer customers is January and February. The television airwaves are bombarded with the commercials with fast money and speedy refunds. Believe it or not, car dealers can put a tax refund check in the customer’s hand faster than any national tax company without processing a tax return or any IRS interaction!
Third party companies give the dealer a way to collect the necessary information via the web in less than 10 minutes. Forms are printed out…already completed. All the customer does is sign the required forms and the process is finished. The dealer can print checks for up to $1,000 in less than 60 minutes. Entire refund checks can be printed the same day or next morning.
Have you ever been to a major tax office in late January? Average wait times are one to three hours, even with an appointment. Car dealers can eliminate that wait and provide the customer with a cheaper alternative as well.
You may have signed on to be in the car business, but the fact is that you are actually in the collections business. The problem is that collections can be like getting water from a stone. Tax season is the only time of the year that the stone is a soaked sponge, but only for 24-48 hours. Much of the customer’s tax refund is committed in November and December and more often than not, they over-plan and under-budget. A $5,000 tax refund cannot satisfy the $9,000 wish list that has accumulated over the past several months.
So, if you are not one of the first creditors they see when the refund money hits their hand, you can easily get overlooked. Why not print that refund check for them?
Tax season is the annual golden goose, but if you do not take the customer’s psychology into consideration, you will often miss out.
Chip Wiley is a 2001 marketing MBA from the University of South Florida and has been the marketing director for Tax Refund Services Tax Max since 2002.