The Sales Process in a Buy-Here Pay-Here
By Steele Gudal
Every new car dealer knows that sales is the heart of his organization. Much money is spent on training, motivating and evaluating sales personnel. However, dealers starting a buy-here pay-here operation should be cautioned that traditional sales practices may not be the best. For many reasons, the sales process is very different.
Never lose sight of the fact that the sale is not the end of the transaction. It is just the beginning of an ongoing relationship with that customer for the entire term of the loan. This is emphasized by the fact that your gross profit on the sale is recognized over time, and the value of your asset depends on your customer's willingness and ability to pay. As a result, you should always keep the customers' focus on the benefits of helping them obtain and improve their credit, while providing for their transportation needs. First and foremost, you are selling an affordable payment and down payment on dependable transportation. Secondly, you are selling a car with features and benefits. Anyone who has been in this business for any period of time knows their customers will not pay for a car unless they see a benefit in doing so. A certain percentage of mechanical failures and breakdowns are inevitable in this business. When this occurs, it is easy for your customers to become indifferent about the benefits they receive from your relationship. But if you can take care of the customer in these situations, the customer will respond in kind. They become refocused on the original benefits, and the loan is much easier to collect.
This approach begins from the moment your customers walk on to the lot. As soon as possible, you need to sit them down at a desk, take the application and begin evaluating their credit. Get satisfactory answers to past credit problems and verify all income and expenses. You also need to determine the type of vehicle the customers require (not want) and how many miles they typically drive. Only after you have this information can you determine what the customers can afford and then begin to match your inventory to their needs. Remember, you are not generating a loan for some faceless, third-party lender. If you set the customer up to fail, you are setting yourself up to fail.
Your role is to sell the customers what they need, within their budget. You may need to ask a few hard questions along the way to determine that. You also must recognize your role in putting together a deal which benefits both parties. The car you are selling is not the customer's dream car, and you don't need to pretend that it is. However, you do need to make customers see that paying the loan as agreed gets them a step closer to that dream car.
I have seen very good new car sales people cause a collection problem because they did not put enough emphasis on the credit side of the transaction and the importance of re-establishing credit. By giving too much attention to the vehicle and focusing only on closing a sale, they have not laid the groundwork for a collectable account. None of this is designed to say that your sales people should not be aggressive, or that their sales skills are not transferable to buy-here pay-here. They just need to make sure they are selling the right things.
Steele Gudal is the President and COO of J.D. Byrider Franchising, a chain of 100 buy-here pay-here dealerships operating in 35 states and Canada. J.D. Byrider and its franchises own and service over $400 million in BHPH receivables.
