All In

By: Jeff Hatch

July 07, 2017

Getting Your Staff On Board With Your CPO Program Begins With Asking Five Key Questions

So you’ve decided to enter the certified pre-owned business. Now how do you get your staff involved in order to make sure the project actually makes a difference to your bottom line? 

Fact is, most programs started by dealerships turn out to be stop-and-start affairs. The initiatives work fine when they are new, but once the spotlight is off they fade away into the darkness. 

There’s an old saying in golf that you can’t win a tournament on Thursday, but you can lose it that day. Another golf adage says on that first day you set yourself up for success on Sunday.

That’s how it is with any program started in a dealership.

The watchers and waiters predict the demise of the program and then watch it die because no one participated – specifically, them. Then they brag about how they knew this program would never work.

But an effort from everyone could have made the vision a reality. That’s why it is essential to get buy-in from everybody in the store at the beginning and reinforce that commitment throughout the entire process. 

Everyone must understand the mission, because anyone who is not engaged can be the clog that causes the program to fail. 

Getting buy-in starts way before opening day. 

It is important in the acquisition of buy-in that essential people are made to feel like part of the initial decision-making process. The earlier they feel part of the process, the harder they will work to make the program a success. 

That starts with a clear enunciation of the problem we are trying to solve. If there is no problem to solve, then why start a new endeavor? 

Usually the problem is the need for more sales, more profit or a combination of both, which translates into the continued success of the store. 

The different departments will look at new programs in a much different manner. But they all must be brought in, because unless they see a process that has benefits to them and their department, they will not be part of its success.  

In the sales model of Harold C. Cash and W.J.E. Crissy, two college professors who wrote an often-cited work on sales psychology, the findings showed while it is important to have a proper introduction, the need awareness module is the most important part of the sale, because it opens the door to a solution. 

Unless there is an awareness of the need for a product or service, the call to action – which is sales – will go unheeded. 

Clearly laying out the need will help the department heads arrive at the conclusion you want them to. 

The old car guys always defined sales as “giving the customer enough information to allow them to arrive at the conclusion you want them to.” Once they buy into that conclusion, they will be sold and it will become their program. 

So how do you accomplish that? 

As renowned leadership authority Stephen Covey said, you need to begin with the end in mind.

In a speech to the graduating class of the Harvard Graduate School of Education, dean James Ryan claimed that there were five essential questions that must be asked of any enterprise to find the motivation for long-term success. 

The first of those questions is: Wait, what? That’s about slowing down the flow of information coming in and gaining clarity about the project. 

The employee team must understand the idea before they can advocate for the program. Or, as Harvard sociology professor Rakesh Khurana said, “You must emphasize inquiry before there can be advocacy.” 

The team may say they are behind a program to make the owner happy, but until they can think like the owner and understand how certified pre-owned can create a different outcome for the future of the business, there will be no dedication.

“Wait, what?” is the question that must be asked once you arrive at the conclusion that you need a certified pre-owned program to be competitive in the marketplace and create a long-term commitment with your customers. The reason is that a long-term commitment is what millennials are looking for when they buy cars. 

So the answer to, “Wait, what?” is, “We are going to sell the same vehicles, purchased from the same locations – so there is no change in your vehicles – but with a guarantee from you that the customer is going to have a worry-free ownership experience. We establish that worry-free experience by providing a warranty on our vehicles, even the vehicles with 140,000 miles on them, if they pass inspection.” 

What happens with your staff when you’re explaining your desire to change your relationship with your customers? They hear Charlie Brown’s teacher: “Wah-wah-wah-wah.” Then you hit on something important. Suddenly, it’s, “Wait, what?” 

That’s right. This is how we are going to compete with new car franchises for customers and dominate the local competition – by giving our customers more and elevating our reputation in the community. In other words, we are going to unlevel the playing field.

As your salespeople settle back into reality, the next question is, “Who is going to pay for this relationship?” 

Certainly, creating an environment that will allow customers to feel comfortable with the purchase of cars from your lot will create repeat business in the long run. But who pays in the short term is what salespeople fear the most. 

The quick answer is, like everything in the car business, it is paid for by the customers. Salespeople sell from invoice – since the warranty cannot be charged for, certification becomes an invoice item. 

More importantly, offering a warranty creates value in the upsell. Most of the dealerships in the NIADA Certified Pre-Owned program report upsell numbers of 65 percent or better. 

“With 65 to 75 percent of the customers buying the upsell service contract, it isn’t hard to see how quickly this becomes a profit center,” said Natalie Suarez, national director of the NIADA program for administrator Warrantech. “Keep in mind that with NIADA if the customer buys the upsell, the dealer does not pay for the certification warranty.” 

That means that with a concentration on selling extended service contracts, the customers pay for this program along with providing a new source of gross profit. 

The service department’s concerns come from their fear of the unknown. Those guys know about programs that pay 80 percent or limit repair charges, making every repair a fight with customers and the claims department. 

To get service buy-in, find a program that pays retail parts and labor. 

Surveys show customers currently using the dealership’s repair facility will repeat their purchase with that dealer almost 65 percent of the time when they’re ready to purchase a different vehicle. If your certified program allows a disappearing deductible – which brings customers back to your facility – it has the dual benefit of creating more profit in service and selling more cars. 

The “Wait, what?” answer for service is, “We are going to cover people for a longer time, giving them a better car-buying experience and creating at least two new profit opportunities.” 

Getting your team together early and laying out the need awareness with “I wonder” starts a collective discussion that leads to the conclusion you desire. 

For example: I wonder what would be the result if we developed a reputation for giving used car customers a new car experience. I wonder how we could accomplish that. 

When the staff is involved all the way from “I wonder” to program inception, it is hard for them not to be engaged.    

The next question in Ryan’s process is: “Couldn’t we at least…?” Couldn’t we at least look into a program? Couldn’t we at least lay out the parameters of what this would look like? 

Once that is opened, you get past the original disagreements and dissenters and move on to mapping out a process, even if your staff is not entirely sure where you are going to finish with it.

Next is: How can I help?

John Kennedy stirred the country by saying, “Ask not what your country can do for you. Ask what you can do for your country. Not what America will do for you, but what together we can do.” 

In this case, everybody needs to ask, “How can I help?” 

It’s instinctive in humans to help out. There is a human function called the rule of psychological reciprocity, which means we treat others as they treat us. Asking the staff for help creates a desire for them to put an effort into the final decision. It gives them a feeling of importance and empowers them by recognizing their expertise. 

The dealer asking how he or she can help and the staff asking themselves about their path to success and how can they play a vital part in it can lead those who buy-in to do extraordinary things to ensure the continued success and viability of the program.

The final question is, “What truly matters?” 

“This is the question,” Ryan explained, “that gets to the heart of your own beliefs and convictions.” 

Allowing the staff to participate in the certified pre-owned journey to its conclusion is the way to capture the future of your market – because CPO is the future of the used automobile market. 

Your staff is likely to adopt the program as theirs and as imperative to their future. When your staff shares what truly matters and what is your heart’s desire, your ideologically synchronized management team becomes a powerful force in the market place. 

So how do you set yourself up to win on Sunday by the way you play on Thursday? 

First, get the right program – one that pays retail parts and labor, and has an unremitting drive for customer service as shown by Better Business Bureau and other monitoring agencies. 

Quite simply, you have to have a program to compete with factory certification programs. The strength of the factory programs is name association with the manufacturer of the automobiles being purchased. That is tough to overcome. 

But by using a nationally known entity backed by the same organization that operates the OEM’s programs, you can give your program credibility.

Once you have the right program, set your dealership up to succeed by assembling your key people – managers, finance, service, used vehicle buyers and the person who will be doing the certified vehicle inspections – and spending quality time together debating and analyzing the five questions: “Wait, what?,” “I wonder,” “Couldn’t we at least…?,” “How can I help?,” and, “What truly matters?” 

When you arrive at the conclusion that the success of everyone and the dealership is tied to capturing the future, and the CPO program you’ve picked will help in accomplishing that goal, you’ll have developed a program that will continue paying dividends well into the future – and a team dedicated to keeping the process going.

ABOUT THE AUTHOR: William Carr is a longtime auto industry veteran in sales, management and training and a regional training manager for Warrantech Automotive, Inc. administrator of the NIADA Certified Pre-Owned program. For more information on the NIADA CPO program, visit www.niadacertified.com/dealers

This article originally appeared in the May 2017 edition of Used Car Dealer magazine and can be found online at: http://bit.ly/2tQIYLK 

Filed Under: Bill, Carr, certified, CPO, customer, dealership, NIADA, program, service, vehicles

Dealerscope Warranty Roundup: 2017 Goals & Strategies

By: Jeff Hatch

March 14, 2017

Sean Stapleton, president & CEO of Warrantech, recently spoke with Dealerscope magazine as part of a discussion on upcoming company initiatives. The following is an excerpt, providing a brief glimpse of what Warrantech has in store for 2017 to help businesses increase their extended service plan offerings and give customers the most value for their money and a worry-free shopping experience. 

Warrantech has developed a revolutionary new customer loyalty program for its partners that is designed to generate both recurring protection plan revenue and long-term customer retention.

The program allows retail partners to offer their customer base customized protection bundles for major appliances, mobile devices and connected living products owned by the customer, regardless of where the product was purchased. Partners have the ability to offer their customers monthly product protection subscriptions designed to enhance the customer’s experience with a full menu of features including 24/7 tech support and seamless repair/replacement solutions.

The program can be customized to provide disappearing deductibles for services or products provided to customers under the plans procured through the participating partners, thereby incentivizing customers to remain loyal to the partner retailer. Moreover, the rich data from the program can be monetized to help deliver targeted and personalized product offerings to customers based on their recent program usage.

Look for the full article in the March 2017 issue of Dealerscope or online at http://bit.ly/2mKB0iJ   

And be sure to keep up with us on Facebook, Twitter and LinkedIn so you can learn more about our innovative products and services as they become available.

Filed Under: Dealerscope, initiatives, offering, products, program, Sean, service, Stapleton

New Program Offers Certified Pre-Owned Cars With A Warranty

By: Jeff Hatch

August 11, 2016

The following story and broadcast appeared on WSPA 7 News, a CBS affiliate in South Carolina. To view the video or read the original article, visit: http://wspa.com/2016/08/11/a-brake-for-used-car-buyers-new-program-offers-certified-per-owned-cars-with-a-warranty/ 

We get a lot of calls from viewers who bought a used car, “as is,” only to have it break down shortly after. When dealers won’t fix it, drivers are out of luck.

Now a new certified pre-owned program that’s spreading across the country has made it to the Upstate. There’s only one local dealership in that program so far because it’s so stringent. So we looked into the benefit for consumers, and whether there is a cost involved.

“Our program bases a lot on statistics. We know that if you do 125-point inspection on a car, the odds of it breaking down go down to minuscule,” said William Carr with The Amynta Group/Warrantech.

The warranty backers have teamed up with the National Independent Automobile Dealers Association to support the certification program.

In addition to that thorough inspection, each vehicle will also get a Carfax report, recall check and come with a warranty of at least 3 months/3,000 miles, or 10yr/100k powertrain.

“By giving the consumer a better product, in the long run we’ll sell more cars. So I think it’s a win win,” said Darla Booher, the owner of Deal Depot in Greer, Spartanburg and Duncan.

Her dealerships are the only active members right now. And as such, those lots will have to abide by a strict code of conduct.

“There is a very stringent standard that deals not just with the inspections but with the entire running of a car lot. Recently an upstate dealer had to exit the program because they couldn’t live up to the standards of the program,” said Carr.

There are about 80 dealerships across the country involved in this program, with about 5 new ones added each week. In fact one in Greenville is coming on board before the end of the summer.

Administrators say the program cost for inspections and the warranty are minimal. But of course it begged the question, is that passed along to consumers?

“No, there’s absolutely not additional cost to the consumer,” said Booher.

In fact, when it comes to the warranty, it’s illegal for a dealer to charge for that or it becomes a service contract.

One word of caution, as a consumer you want to make sure that there’s no bait and switch. If a car is advertised as certified, the dealers should not offer to take off the certification for a lower price. That’s illegal.

The NIADA Certified program performs quarterly inspections to make sure all dealers are continuously compliant.

Filed Under: automobile, Carfax, CBS, certified, CPO, dealer, NIADA, pre-owned, program, Warrantech, WSPA

Purposeful Transparency — Another Reason To Partner With Warrantech

By: Jeff Hatch

June 08, 2016

At Warrantech, we believe that the cornerstone of a successful relationship is the constant sharing of program information with our partners, including underwriting results and key performance indicators (for example: customer satisfaction, service levels and product reliability). We feel that this purposeful transparency — coupled with our unmatched flexibility, innovation and deep industry expertise — are the attributes that separate us from the competition. 
 
As a subsidiary of The Amynta Group, a multinational property and casualty holding company that is one of the strongest and most financially stable companies in the industry, we are able to provide both global underwriting and administrative services. This vertical integration creates complete transparency and a level of insight into program performance that is unparalleled, which in turn leads to increased efficiencies and optimization for your business plan. 
 
During quarterly business reviews with our partners, we present key findings and can pinpoint issues right down to the part level. This gives us the opportunity to help alleviate any concerns with your program and give you deeper insight into its performance, which includes, but is not limited to:  
 
Industry observations and patterns
Best-in-class performance/benchmark analysis (including ROI and opportunity costs)
Brand leaders and industry innovations
Competitive intelligence (industry and market leaders)
Best practices
Marketing updates
Regulatory environment review
Contact center KPIs/SLAs
Experience reports
 
We also provide real-time access to our systems, giving each partner the ability to track program performance at any given time. Additionally, to ensure that the program is maintained in a manner consistent with your standards, we can structure your program so that your employees can be embedded at the Warrantech facility. This transparency enables us to provide you with profit sharing programs so that you are able to benefit even further from the ongoing success of your program. 
 
To learn more about Warrantech’s unparalleled transparency, visit warrantech.com or call 800.833.8801.
 
 Warrantech Program Transparency at a Glance
 
 Program Accessibility:
   • Open communication 
   • Real-time program performance
   • Complete system access
   • Embedded client employee options
 
 Program Design Customized to Meet Each Client’s Needs: 
   • Creation of policy and procedure handbook 
   • Personalized performance metrics
   • Customer satisfaction levels using
     - Customer surveys
     - Quality assurance
     - Net Promoter Score (NPS)
     - Social media

Filed Under: business, client, innovation, insight, integration, partner, plan, program, transparency

Extended Service Plans: Getting Down to Business

By: Jeff Hatch

June 10, 2015

As a retailer, you know that extended service or warranty plans are a natural product offering for your business. They’re both comforting to consumers and profitable from a business perspective. But how much do you know about how your warranty programs work? Who are the players involved and who’s responsible for the various elements in fulfilling the plan? What’s your return on investment? Understanding the life cycle of your warranty plans not only impacts your customers and profit margins, but also your brand.
 
Start Here
Filling in the family tree of a warranty program can be a confusing process. Who’s responsible for what, when and for how much can be seen as a burden that many retailers choose to disregard. But, unless you know the answers, you’re leaving your store and customers at risk. 
 
An easy starting point is uncovering who the insurance company is that’s covering your plans. The insurance company, or underwriter, is the one who insures claims liabilities from the warranty contracts. It’s important to look for insurance companies that are well-managed and well-capitalized because they are truly the foundation of your plans. This is the company that you’re building your reputation on when claims need fulfilling, even if your business fails. This is the group that needs to be trusted, vested and insured so you and your customers can have peace of mind. 
 
Next Steps
A service contract provider is the company that is legally and financially obligated to repair or replace the customer’s covered product. This company is your business partner. They create and administer customized extended service plans on your behalf to meet your operations’ needs, customer expectations or product requirements, and in return, collect a fee for their services. Full disclosure of costs and margins is important because once plans are agreed upon with the service contract provider your store is able to mark them up accordingly or offer them to consumers at recommended retail prices. 
 
If you’re not sure what you’re paying for, you have every right to ask your service contract provider a few questions to level the playing field: 
 
1. How is your cost divided between insurance and administration? 
2. What is each entity’s profit margin?
3. What is the program loss ratio, both overall and by product? If your loss ratio is very low it should give you the opportunity to lower prices to sell more ESPs, be more competitive or collect more profits and put them in your pocket.
4. Am I going to receive all the information I need on a regular basis to ensure I am getting the best price and product compared to the market?
5. Do you participate in a profit sharing program with your insurer? 
6. Is my program compliant to protect my company’s brand reputation? Have all statutory compliance and filings been addressed? 
7. If there is an insurer and/or re-insurer involved, what is the financial strength rating of each and who is your contact at the insurer? 
 
The service contract provider and warranty administrator (or third party administrator) are usually the same organization. As a customer facing group, it’s critically important that your store has access to a contact person and your customers find it easy to work with this organization. They are also responsible for training your sales representatives on the ins and outs of selling warranty plans and how to facilitate a claim. 
 
Since you’re paying the administrator a fee, you want to align yourself with well-respected companies that work hard to earn trust and deliver on expectations — for your store and your customers. Working with administrators that allow communication with all parties, including the underwriter, keeps the relationship in check and ensures plans operate smoothly and adhere to specific terms and conditions. Additionally, administrators contract with repair facilities to repair or replace covered products, so easy access and open lines of communication are essential in this relationship to ensure the parties involved — you and your customers — get what they’re paying for.  
 
The Customer’s Role
The service contract is an agreement between the service contract provider and your customer. The service contract terms and conditions may state that for service or to report a claim, the customer should call a separate number to contact the warranty administrator. For your store, keeping the administration and underwriting under one umbrella provides a hassle-free arrangement that ensures warranty plans deliver positive results for customers throughout the life of the plans.
 
Is Your Plan Working?
While creating an effective warranty program certainly takes a little work, becoming educated about the process and asking the right questions to ensure you’re partnering with the right service contract provider is critical to the success of your business. Bottom line, knowing who the extended warranty players are and how they impact your business can mean the difference in profit and loss — of revenue and customers. 

Filed Under: administrator, contract, customer, extended, insurance, plan, program, provider, service, warranty

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