NABD’s Shilson: How to Get Your Best Customers Back

At Issue:

Many BHPH oper­a­tors report­ed low­er unit sales ver­sus the same peri­od last year. Two impor­tant ques­tions: “Why?” and “What can be done to improve unit sales dur­ing the remain­der of the year?”

The Back­sto­ry:

The upcom­ing NABD East Coast BHPH Con­fer­ence in New Orleans on Novem­ber 3–5 will focus on how to find and keep our best cus­tomers. This is a great time to net­work and make each oth­er suc­cess­ful. Good luck dur­ing the remain­der of 2013 and let’s make 2014 our best year ever!

First Half 2013 Analy­sis – What Caused the Decline?

1.  Tax refunds were slow to arrive and some­what small­er when they did! Some nev­er arrived at all.

2.  Addi­tion­al pay­roll with­hold­ing reduced low-income earn­ers ($30,000 — $50,000 per annum) take-home pay by $600 to $1,000. This real­ly hurt their liq­uid­i­ty!

3.  Gas and food prices increased sharply com­pared with 2012, con­sum­ing more of each customer’s dis­pos­able income.

4.  The US econ­o­my has rebound­ed some­what; how­ev­er, over­time hours and work­forces have been reduced.

5.  The sub­prime auto finance indus­try has been extreme­ly aggres­sive in buy­ing deals from deep sub­prime cus­tomers with bureau scores as low as 460! Worse yet, these cus­tomers are being sold new and late-mod­el vehi­cles with long repay­ment terms and very large month­ly pay­ments, which they can’t afford.

6.  Sub­prime cus­tomers are encour­aged to “give back” their exist­ing vehi­cles by sub­prime finance com­pa­nies, and to pur­chase the vehi­cles described in 5 above. This has result­ed in more vol­un­tary repos­ses­sions for BHPH oper­a­tors.

Ken Shil­son Sug­gests Deal­er ‘Do’s and Don’ts’:

  • Oper­a­tors should not change their busi­ness mod­els by putting too lit­tle cus­tomer into too much vehi­cle. This is a “road map for fail­ure” as doc­u­ment­ed by more than $11 bil­lion in con­tracts I have ana­lyzed.
  • Oper­a­tors must not sit back and wait for the mar­ket to return. If you do noth­ing, you can­not expect dif­fer­ent results.
  • The answer is to rebuild a stronger bond with their BHPH cus­tomers. As I sur­vey the oper­a­tors who are main­tain­ing or grow­ing mar­ket share, I note one com­mon trait – they are proac­tive.

What BHPH Deal­er Man­agers Should Do Today:

  • Place a ‘wel­come’ tele­phone call short­ly after each sale, and ask for refer­rals.
  • Hold cus­tomer appre­ci­a­tion events.
  • Strength­en war­ran­ty or extend­ed ser­vice-con­tract pro­grams.
  • Offer free main­te­nance ser­vices to good pay­ing cus­tomers.
  • Main­tain more-pos­i­tive con­tact with cus­tomers dur­ing the entire term of their con­tracts.

Ken Shil­son, CPA, is founder and pres­i­dent of the NABD/Subprime Ana­lyt­ics. Read the full arti­cle here. For more infor­ma­tion on upcom­ing NABD events vis­it www.bhphinfo.com.

 

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