Max Zanan

I’m not one to sugarcoat a crisis, but the pandemic has created at least one happy consequence for car dealers — vehicle shortages . With people everywhere urged to avoid public transport and chip shortage, car sales have hit a record high and demand continues to outpace supply.  So after years of making very little selling new cars, dealers are finally laughing all the way to the bank. No matter the franchise, no matter the location. Car dealers everywhere are having their day in the sun.  Do you know what that means? Some will get burnt.  Whether it’s in 6 months or 12 months, manufacturers will catch up and flood the market just like pre-pandemic days. And the car dealers who did nothing but bask in the glow of their success? They’ll start to feel the heat.  The best car dealerships know that success has a nasty habit of breeding complacency. So while the foolish rest on their laurels, the wise are working to future-proof their businesses.  The best are using this opportunity to examine what’s working (and what’s not working) in their business; their strengths, and their weaknesses.  They know that it won’t be long until competition for buyers is back on, and they’re taking proactive steps to finesse their operations; now, not later.  They’re getting ahead quite simply by getting ahead.  Make sure you’re one of those dealerships. Otherwise, instead of laughing all the way to the bank, you’ll be crying all the way to the bankruptcy court.  Now is the time to ask yourself this: What is your dealership doing to improve and prepare your operations for the future? Remember that when demand exceeds supply, sales training and excellence take the backstage. If you’ve got the cars, the customers will come. But when things reset, will you be out of practice? Out of shape? Out of step with the car dealers that took the time to get organized and stay ahead of the game?  If you’re not sure how to answer that, consider how much time your dealership spends fine-tuning these all-important aspects:  Sales Processes How regularly are you reviewing? When you review your sales, are you considering not just quantity of sales, but quality ? Are you confident in your staff’s product knowledge? Are they confident in their product knowledge?  F&I Product Lineup  When was the last time you took a good hard look at your finance and insurance product lineup? Are you sure it’s up to date and working hard for your business? How about your reinsurance structure? It all adds up. Readiness to Buy  No well-meaning car dealership would wish failure on another, but the hard truth is that not all dealers will survive the downturn. Are you ready to mobilize cash quickly when the opportunity comes to buy a dealership?  Advertising and Marketing  Sure, you don’t need it right now. But when supply outweighs the demand, dealers will be competing to turn customers' heads. Will you be placed to shout the loudest? Plan out your advertising and make sure you’re ready to make that investment when the time comes.  These are just some of the strategies that will separate the winners from the losers. The good news is that there’s still time to decide which side of the line your dealership will be on.  These good times are well deserved. But don’t expect them to last. Even more importantly, don’t get caught out when the tide starts to turn. Use today’s flush to build a better, more resilient business for tomorrow. 

So, you want people to buy your cars.  Let's say I'm your customer. As a car dealer, you know why you want me to buy from your dealership... So you can stay in business, hit your factory monthly goal, or finish number one in your zone, district, or country. That part is easy. But can you tell me why I should choose your dealership? What exactly do you have that others don't? Can you make me an irresistible offer? When the time comes for you to articulate your 'Why Buy From Us' story — be it on your website, or the sales floor — are you doing it successfully? After all, there's a lot of competition out there. The market today is full of consumer choices. There are new car dealers, used car dealers, Carvana, Vroom, and many more players. Many of these competitors will have almost everything that you do — be it great service, friendly sales staff, or appealing inventory. This makes for a very competitive market. A successful dealership needs a strong value proposition. Having a strong 'Why Buy From Us' message will make it easier for car buyers to choose your dealership over your competition. This story needs to be crystal clear — if it's too long, your customers will tune out. If it's not competitive enough, they'll go with the better option.  But how do you make the best offer, while still making the most money? Here's where I can help. My job is to help car dealers make more money while maintaining high customer satisfaction and retention. A good 'why buy from us' story needs to have a concrete offering — otherwise known as a product package. To help you make your story more competitive, I want to share with you the most popular 'Why Buy From Us' products. When it comes to choosing which one to add to your arsenal, there's no right or wrong choice. Each product addresses a different concern — you should know your market and which option makes the most sense. The most popular 'Why Buy From Us' products 1. Vehicle Return Program  The uncertainty caused by COVID-19 is real and has a detrimental effect on car sales. Many consumers are afraid of losing their jobs or being furloughed, creating hesitation in buying a new car. A Vehicle Return Program allows your customer to walk away from the car deal in case of job loss. During these trying times, this program can give your customers the extra confidence they need. If you can give them that security, they'll be more likely to choose your dealership. 2. Lifetime Engine Guarantee    Consumers know how expensive car repairs are. The most expensive of all is to repair or replace an engine. Lifetime Engine Guarantee covers the engine for as long as your customer owns the car and performs all scheduled maintenance at your service department. This is a win-win in terms of marketing and service retention. 3. Dealer-Owned Pre-paid Maintenance   You have two choices; either sell factory Pre-paid Maintenance or your own. Dealer-Owned Prepaid Maintenance is only good at your service department, which is good for you. With that in mind, you need to make it more enticing for your customers. The best approach is to give away the first year and upsell to three or five years in the finance department. 4. Combo Products  Preload 6 months of a combo product and upsell to a longer-term in finance. There are numerous combo products available — tire and wheel/key replacement/paint and fabric protection/paintless dent repair. Most consumers already understand and value these products, so the upsell shouldn't be an uphill battle.   How to deliver your 'Why Buy From Us' story A clear cut 'Why Buy From Us' story is the most effective marketing and customer acquisition/retention message. Make sure that it is properly displayed on your website (home page), and in the showroom.  It should be quick to explain, and easy to understand. It is mission critical that all of your staff are properly trained. Salespeople have to know what is included with the purchase of the car, finance managers have to know how to upsell, and service advisors have to know how to process a claim.   At the end of the day, your goal is to stand out from your competition and increase your market share. Not having a clear 'Why Buy From Us' message simply means you are ceding market share to your competitors, and that is something you cannot afford in 2021!

Let me guess — you’re on the upswing. How do I know this?  Car Dealerships Everywhere Are Crushing It Right Now.   It all comes down to two incredible things that happened this year. Pent up demand and inventory shortages.  After suffering through financial losses caused by the lockdowns, car dealers are now seeing record-breaking sales and record-making profit. It doesn’t matter which franchise, it doesn’t matter the location -- everybody is crushing it. As the saying goes:  "A rising tide lifts all boats."  Unfortunately, many car dealers think that their boats got much better and that there is no tide.  But, a Word to the Wise... If you’ve been taken in by the belief that cars sell themselves right now... Then you’re making a big mistake. And that’s because you’re likely ignoring the tools and opportunities to bolster your business for the future. The belief that you can sell your way out of trouble is the real false positive here! The cold hard truth is this. The Good Times Won’t Last Forever.  At some point in the VERY near future… Consumer demand will catch up. Automakers will flood dealerships with inventory. And on top of it all, there could even be a second wave of COVID-19. That’s the reality that many dealers choose to ignore. That’s the moment when they will realize that their boat is sinking and that they need all the tools to plug the holes.   And There Will Be Some Who Do Too Little, Too Late.  Don’t be one of those car dealers.  If I could give you just one piece of advice, it would be to  find a way to make more money per unit sold now,  because that’s the skill that will separate winners from losers when the market cools down.  So What Could You Be Doing Right Now To Bolster Your Business For the Future?  The first place you should look for additional profit is the finance department. Every dealership sells F&I products. Five Steps to Maximize on Your Sales Today : Review and limit the products in your arsenal.  Stick to basics — Vehicle Service Contracts, GAP, tire and wheel, combos, etc. Remember that finance managers have limited time to spend with each customer. They can’t show a never-ending list of products, or the customer will just tune out and say no to everything.   Shop around  so you can start making savings .  Get a price comparison from another provider. I have been able to save car dealers $400 per VSC.   Invest in the training of finance managers.  You need your whole team to be watertight so that you can ride out the storm. When was the last time you had an F&I trainer in your dealership? Remember that training is something we DO, not something we DID.   Set expectations and hold people accountable.  Clearly communicate the average gross profit and product penetration per deal required in your dealership. Make sure to use a motivational pay plan that encourages both — product sales and gross profit — as well as above-average customer satisfaction.   Most Importantly — Have. Cash. Ready.  The sad truth is that a lot of dealers will not survive the next downturn. You want to be ready to buy these dealerships at a discount. One of the most efficient ways to get cash is to consider a capital advance from an F&I provider. In a nutshell, an F&I provider loans the money and the dealer pays it back through F&I product sales. This is another reason that training and accountability seriously matters.  Strategic and financial preparation makes life easier, so do it now while the music is still playing. It’s time to get your house in order and your F&I department is the natural place to start.  

Before we start exploring the reasons why every car dealer must conduct an on-site compliance audit in his car dealership, let us form an overview of its fundamental concept and notches of significance. There are federal guidelines that govern each department of a car dealership; for example, there is a Used Car Rule for the sales department and CAN-SPAM Act for the BDC department. It is mission-critical to adhere to these guidelines in order to improve customer experience and reduce liability associated with fines and penalties.  Compliance is majorly receiving the limelight of the automobile industry For the past few years, compliance is receiving a major share of the limelight from the automobile retail industry and for all the wrong reasons. For quite some time now, car dealers across the country are already suffering from a bruised reputation and to top it off, since car dealerships are sales organizations, compliance is oftentimes, not a priority. Multiple factors are responsible for driving the owner to get an on-site compliance audit for his car dealership- firstly, without a compliance audit, you can land yourself in serious legal trouble for violating the standard compliance practices and protocols. Secondly, the audits will help you uncover the problems that have been lying latent for long and resultantly reduce risks and upgrade internal control. And lastly, you can regain your peace of mind knowing that you are complying with the code of ethics and policies targeted towards all the departments and employees.  Ensures that the employees are properly trained  Compliance training is key to success. An on-site audit will determine if your dealership has an effective onboarding for new hires and regular training for existing employees. Auditors will be able to see what type of training is being conducted, its frequency, and if it is documented.   Reduces vulnerability  Like we have already mentioned, an on-site audit is the principal component of the comprehensive compliance program and has been delineated to cover all the crucial departments of a car dealership because getting it done in any other way might increase the vulnerability of the dealership and consequently, decrease its profitability. Furthermore, an on-site audit is effective because before fulfilling the prerequisites of compliance, the auditors are allowed to interview their employees and analyze their policies and procedures as well as check deal jackets.  Improves customer experience Once all the stages of the audit are covered, you will be served with a report that includes the necessary policies for the dealership henceforth onwards, procedures and the best practices according to the legal clauses pertaining to it. Therefore, an on-site audit does far more than simply tightening the straps of compliance; it helps to uncover non-compliant behavior and improve customer experience. 

No matter the size of your car dealership, it is in your best interest as a dealership owner to put tools in place that protect the reputation of your organization. With each new car dealership employing an estimated 70 people on average in 2019, the best place to start is within your company. Implementing a comprehensive compliance program that consists of regular audits, appointing a compliance officer, and providing online training is a solid foundation. Unfortunately, these steps are not always effective when it comes to rogue employees.   While the majority of your employees are good workers who hold the reputation of your dealership in high esteem, all it takes is one employee with bad intentions to cause problems. That’s why a whistleblower hotline is a must for any dealership’s comprehensive compliance program. Today, we’ll be exploring what a whistleblower hotline is and how it can benefit your car dealership. Let’s get started! What is a Whistleblower Hotline? A whistleblower hotline is a service that enables your employees to anonymously report unethical and/or unlawful behavior within the workplace. When implemented as part of a dealership’s comprehensive compliance program this can be a powerful tool in reducing the chance of illegal company actions. Car dealerships operating with a whistleblower hotline in place have a second line of defense against rogue employees and protect the overall reputation of the company as a result. Once a whistleblower hotline is in place, your employees will have the power to submit anonymous reports that are directed to designated persons registered by your dealership. This streamlines the process of identifying and fighting against inappropriate and unlawful actions within the workplace. The Benefits of a Whistleblower Hotline If your car dealership has yet to implement a whistleblower hotline as part of its comprehensive compliance program, you may be interested to learn how you can benefit. There are a number of benefits associated with a whistleblower hotline ranging from the protection of assets and reputation to the detection and prevention of non-compliant behavior. Let’s explore those benefits in-depth. Building Trust One of the largest benefits of a whistleblower hotline is that it builds trust within your company. When unethical or illegal conduct is happening within your dealership, there is at least one person (or many) that knows what’s going on. Unfortunately, those who are aware of misconduct may be reluctant to report it due to fear of retaliation. A whistleblower hotline is an effective way to encourage your employees to speak up. By providing an anonymous method for your employees to report misconduct, they will feel more comfortable in reporting wrongdoings. This builds trust between you and your employees and strengthens a focus on transparency. Quicker Detection of Misconduct As you can probably guess, when a dealership’s employees feel more comfortable in reporting misconduct, wrongdoings are detected much more quickly. When you are made aware of misconduct sooner, you’ll have the power to put a stop to it immediately. The protection of the dealership’s assets and reputation is key. The rapid detection of misconduct is especially important for small dealerships. With the average duration of fraud until detection being 18 months, it is clear that knowing about instances of fraud as early as possible can be the difference between staying in business and losing everything. A whistleblower hotline means you’ll know about illegal behaviors sooner and save money as a result. Reducing the Risk of Violations and Legal Battles The purpose of a dealership's comprehensive compliance program is to ensure that your dealership meets auto dealer laws and regulations on both federal and state levels. Without meeting legal requirements, your dealership is at great risk of incurring penalties. When implementing a whistleblower hotline into your comprehensive compliance program, you’re actively reducing the risk of hefty fines and even criminal penalties.  When your employees have a method at their disposal to sound the alarm on regulatory violations early on, there is a greatly reduced risk of violations and legal battles. It’s a known fact that regulators are more likely to lessen or eliminate penalties when dealerships have practiced due diligence in addressing issues. 

Auto dealerships that are not compliant feel the impact directly in terms of their loss of profits and reputation. Without a comprehensive compliance training program, car dealers’ bottom lines are affected. Studies show that more than 73% of consumers prefer dealing with dealership staff that has completed compliance training and has certificates of completion on display. And more than 80% of dealers think compliance training and implementation will improve their dealership’s reputation in the community and relationships with customers. The average dealer is probably more afraid of consumer lawsuits than the compliance violations that lead to these lawsuits. Risks related to noncompliance affect the entire dealership, however, yet less than 25% of dealers employ a compliance officer. Dealers should understand that a partial solution to total dealership compliance is not the answer. Federal regulations apply to all departments of a dealership, meaning that a comprehensive approach to compliance is the only way to improve the reputation of the dealership and change its organizational culture. A compliance program should contain written policy, training, and activity requirements. These requirements should be easily identified and enforced because they involve regulations that, if not followed, can result in significant fines. To improve dealership compliance, three areas should be addressed: Employee training Operational procedures Audits and paper trails 1. Employee training Dealerships should provide employees with online classes to better understand compliance rules, as well as compliance-related factors that affect their career growth. Training instills a culture of compliance and keeps employees accountable. These online courses should be designed to provide comprehensive education on federal compliance regulations, best practices, and corresponding policies and procedures. Every dealership should have an employee handbook that sets forth its internal policies and procedures. A dealership may even have specialized, job-specific policy manuals (F&I, sales, etc.). Having these materials available on the dealership intranet is a great way to help employees stay current with policy. Also, when consumers know that dealerships have formal employee training policies, they feel more confident about the dealership. 2. Operational procedures An example of operational procedures is having an identity theft prevention program (ITPP). It is imperative for a car dealership to implement an ITPP, because by the time an identity thief walks onto the showroom floor, the theft has already occurred. Dealers should be prepared in advance if an investigator or plaintiff’s lawyer asks to see a copy of their ITPP. Dealers must train employees on the dealership’s operational policy, which must detail the dealership’s processes to detect and mitigate identity theft. Online training programs are particularly valuable in helping employees understand identity theft. Also, dealerships that can provide an electronic paper trail regarding identity theft issues and have a current ITPP report available help customers feel safer when handing over their confidential financial information. 3. Audits and paper trails The Safeguards Rule requires dealerships to develop a written information security program (ISP) that includes a risk assessment, oversight of service providers, and regular reviews of the ISP’s effectiveness. Having a compliant ISP provides a paper trail should your dealership get audited. In addition, hiring a third-party audit company is extremely beneficial to assess dealership needs, and no compliance program is complete without it. For a dealership to remain competitive and be a top choice for consumers, it must be 100% compliant. By instilling a culture of compliance, a dealership will enjoy greater productivity and sales, and earn a more positive reputation. Dealerships that remain non-compliant or only partially compliant remain at risk of incurring huge losses. Addressing the categories mentioned here will play a major role in reducing that risk. Max Zanan is a seasoned automotive industry expert with nearly 15 years of experience in sales, F&I, and dealership consulting. Max started Total Dealer Compliance (TDC) to help car dealers mitigate the risks and exposure through compliant practices. TDC conducts Compliance Audits and provides an E-Learning platform for dealer personnel to take courses in order to instill the culture of compliance . As the company’s president and CEO , Zananutilizes all of the skills he has picked up over the years in order to cohesively mentor dealerships on how to increase revenue and profitability in all departments.