The CPO Playbook

By: Jeff Hatch

January 24, 2018

Make the Right Call for Your Certified Pre-Owned Program By Getting Your Entire Team on the Same Page

How do you build a top-tier certified pre-owned marketing program in your independent operation?

You build it from the ground up.

That means you start with the basics – a good partner to help you with your program and train everyone on their role in the process.

When Peyton Manning was quarterback of the Denver Broncos, he would yell “Omaha” as he waited for the snap.

Manning’s voice made the entire stadium tense up in anticipation of what was coming. Most important, his teammates snapped to a state of mental preparedness. When the snap came, they could react without thinking. 

The offense has the advantage over the defense – the offense knows what’s about to happen.

Every player knows his responsibilities and if any of them fail to carry out their assignment the play won’t work. Because they have a plan, the team moves in unison, beginning at the sound of the quarterback’s voice.

That can happen in your store. You can make is so everyone knows what to do when you call the play. 

When your staff knows which part of the playbook is being used and what everybody’s assignments are, the store becomes a team.

Manning was able to get buy-in from his teammates because they all knew the situation. Some plays are designed to get one tough yard and some are after a big gain. 

When everyone knows the situation and the goal of the play, they can carry out their duties with a more dedicated commitment.

So why are you calling the play for a CPO program?

Even if you know the answer to that question it might not be obvious to your employees.

The answer, really, is easy – to keep up with the competition.

The popularity of certified pre-owned is not showing any signs of slowing down. In fact, CPO sales set records for six consecutive years, and when the final numbers are tallied for 2017, they’re expected to break the record again.

Certified pre-owned vehicles are becoming more desirable even though fewer than half of all customers know what CPO entails. 

According to Autotrader’s 2014 CPO research study, 60 percent of car buyers said they’d like to look at a CPO unit while making a used car selection, but only 48 percent actually knew what it means for a vehicle to be certified. 

Those customers most likely don’t know the difference between warranties that come with a vehicle and extended service contracts that are purchased.

That leads to several conclusions about how to maximize the value of a CPO program.

Customers have heard of CPO and feel it is a better option. They also know it’s usually backed by a warranty for some period. 

The statistics tell us that to get the full value of a CPO program dealers should not rely on what customers think they know about certified pre-owned. A full presentation and explanation allows salespeople to create a need for the program.

For example, at Auction Direct USA, one of the nation’s most successful CPO dealerships, salespeople walk customers past an education wall that teaches them about Auction Direct, NIADA and their partnership in the NIADA Certified Pre-Owned program. 

Sales is about giving enough information to allow customers to arrive at the conclusion you want them to. That definition requires your salespeople to have knowledge of what the dealership’s program includes.

With that knowledge your salespeople can provide customers information that allows them to consider the value of the CPO program when weighing your dealership’s vehicles against the competition’s. 

The economy continues to grow, allowing more people to be able to buy a vehicle. That alone is going to create a spike in business.

To capture more than their share of that market, independent dealers must be ready to compete for every deal. 

Analysts agree a majority of used vehicle buyers are interested in at least learning about CPO.

That means if you do not have a CPO program, you are left fighting for the scraps among the minority of customers who don’t know about or are not interested in CPO. And it allows new car franchises and sophisticated independents to dine on the more lucrative segment of customers who are searching for certified pre-owned vehicles. 

You need to let your team know why the CPO play was called. The people who represent your programs to the public need to know it will allow the store to stay competitive and will make marketing to the entire spectrum of the used car business viable. 

Once the people who will make your program a success know why you are setting up a CPO program, the next question to answer is, “Why that one?”

So how do you choose which program to bring into your dealership family?

Factory programs are fantastic – but they’re not an option for independent dealers. OEMs only certify their branded vehicles exclusively through franchise stores.

Even if independents could get in on the factory CPO programs, they have their issues.

Just a few years ago, for example, the margin for CPO vehicles was as much as $2,500 more than for other inventory. Today, according to research by iseecars.com, it’s more in the $750-$1,200 range.

That’s still a good return, but when you add in the average price of reconditioning a used vehicle to factory CPO specifications – including expensive items such as factory floor mats and four matching tires – most of that profit for OEM programs goes to expenses that don’t increase the customer’s satisfaction with the vehicle.

Indeed, factory programs are so stringent with their qualifications that they only certify their brand at a factory store. Which is why some new vehicle franchises have begun to use independent programs to certify their non-factory inventory. 

Without a factory program what are you left with?

There are three main ways to certify a vehicle. OEM programs are one. Independents can also self-certify through a service contract company. 

Or they can find an independent organization willing to certify the dealer’s CPO process.

The best-known national certified pre-owned program for independent dealers in the NIADA Certified Pre-Owned program, sponsored by NIADA – an organization with more than 70 years of history whose mission includes promoting ethics in the used car industry. 

When NIADA wanted to bring its reputation and expertise to the CPO world it looked for a partner with the ability to certify pre-owned vehicles as well as experience and financial wherewithal to back those vehicles with a strong warranty. 

The exhaustive search for a program administrator led to The Amynta Group and its wholly owned subsidiary, Warrantech. 

“The best thing about that is it’s the same administrator General Motors and Mazda use for their extended service contracts and CPO, giving independent dealers’ customers the same service a new vehicle franchise would give,” said Warrantech’s Natalie Suarez, director of NIADA Certified. 

As a result of NIADA’s partnership with The Amynta Group, Suarez said, “we are able to provide a high-level, complete marketing program for independent dealers.” 

NIADA’s program, Suarez said, “is designed to give customers the kind of service in the event of a breakdown that’s usually reserved for new car dealerships, elevating the independent dealer in the customer’s eyes.

“And the more repeat and referral business dealers can generate, the less they spend on conquesting new customers.”

One of the first car salespeople in America was a man named Eddie Rickenbacker, who was best known as America’s most decorated flying ace, earning the Medal of Honor in World War I. He also raced in the Indianapolis 500, helped design a vehicle that bore his name and founded Eastern Airlines. 

Rickenbacker always said he learned while selling cars that you had to find your advantage and move continually towards that advantage, a philosophy that allowed him to survive countless dogfights over France. 

“The one thing I know for a fact is every lot has the same vehicles and the prices are pretty much the same, so if you want to differentiate yourself from the pack, you better provide something no one else does,” longtime auto dealer and advertising pioneer Bob Catterson once said. “If you can’t do something special the only other choice is price, and price prohibits sales, not makes them.”

Calling the NIADA CPO play for your store creates that competitive advantage over other independent dealers – and it allows you to compete with new car franchises for their used vehicle customers.

NIADA adds to that advantage with CPO partners that include some of the biggest names in the industry, such as Carfax, eBay Motors and SiriusXM Radio, adding credibility with customers and making your inventory more visible on search engines. 

Not to mention The Amynta Group, which has earned an A rating on A.M. Best’s rating system as one of the most stable companies in America and an A+ rating with the Better Business Bureau. 

Once all the people in the store know their part in running the play, it is important for everyone to flawlessly execute his or her assignment.

As legendary coach Vince Lombardi once said, “You can’t coach a player who hasn’t been trained.” Before they can execute the plan, your staff must be trained. 

Whoever is responsible for certifying vehicles must understand how important it is to properly communicate the condition of each vehicle to management.

If it costs too much to bring the car up to CPO standards, management needs to know. And the certifying technician needs to know that not certifying a vehicle also has a cost to the dealership. 

The technicians who inspect the vehicles need to be shown the deeper importance of their work to the sales process.

In the CPO process, credibility is extremely important. Customers must believe in the concept of the inspection process. If customers do not believe there has been an actual technician touching the car, they will doubt the value of the warranty and that will negate any certification advantage. 

Sales must use the NIADA certification checklist in the sales process. 

The sales department should leave a copy of the checklist in the glove compartment of the certified vehicle. The salesperson will pull the checklist out during the walkaround or demo ride and go over how the inspection affects the customer’s ownership experience. 

The tech’s role is to check every box individually to give validity to the checklist. He or she can help sales even more by adding extra details, such as writing the actual numbers for tire tread and brake pad width.  

When the behind-the-scenes people who help sell vehicles realize how much the little things they do help the profitability of the store, their work ethic is increased.

Salespeople have the job of being enthusiastic about the program.

W. Clement Stone once said, “A positive attitude increases the likelihood of a good outcome.” That means being committed to the belief that what the store is providing the customer has value helps accomplish the task – in this case, the task is maximizing profit and sales volume.

How did Peyton Manning always perform at a high level and get his teams to perform with him when he called his plays?

The team started from the ground up, making sure everyone knew the play, their role in the play and the goal the play was meant to accomplish.

If everyone does their job, from the inspection process to sales and finance, having a great CPO option allows independent dealers not only to keep up with the local competition but to be competitive with dealers across the country via the Internet.

When you have the advantage, you become a difficult team to compete against. 

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 January 2018 edition of Used Car Dealer magazine and can be found online at: http://bit.ly/2DyhBHN 

Filed Under: Carr, contract, CPO, dealer, dealership, extended, independent, NIADA, service, team, William

Warrantech Named As A Finalist In The 2018 Stevie Awards For Sales & Customer Service

By: Jeff Hatch

January 19, 2018

Warrantech was named as a finalist today in the Award for Innovation in Sales category in the 12th annual Stevie® Awards for Sales & Customer Service. Having previously won Gold in this category, Warrantech will ultimately be a Gold, Silver or Bronze Stevie Award winner in the program. Warrantech has been nominated in two other categories as well – Sales or Customer Service Solutions Technology Partner of the Year and Sales Management Team of the Year. 

Based on the average scores of the 150 professionals worldwide who participated in the preliminary judging, Warrantech’s FutureProof Protect program was cited for its ability to eliminate the confusion that customers have with regard to smart-home products. An innovative service contract, it is the first protection plan of its kind to extend coverage to both smart devices and traditional household electronics. In addition to repair and replacement services, the FutureProof Protect plan offers 24/7 tech support to help customers with the integration of new smart-home products.

More than 2,500 nominations from organizations of all sizes and in virtually every industry were evaluated in this year’s competition. Finalists were determined by the average scores of more than 150 professionals worldwide, in seven specialized judging committees.  

Entries were considered in 89 categories for customer service and contact center achievements, including Contact Center of the Year, Award for Innovation in Customer Service, and Customer Service Department of the Year; 60 categories for sales and business development achievements, ranging from Senior Sales Executive of the Year to Sales Training or Business Development Executive of the Year to Sales Department of the Year; and categories to recognize new products and services and solution providers. 

The final results will be announced during a gala banquet on Friday, February 23 at Caesars Palace in Las Vegas, Nevada. Finalists from the U.S.A. and several other nations are expected to attend.   

“The 2018 judges were so impressed with the wide range of achievements detailed in the Finalist nominations,” said Michael Gallagher, president and founder of the Stevie Awards. “We look forward to announcing the Gold, Silver and Bronze Stevie placements in Las Vegas next month.”

For more information about the Stevie Awards for Sales & Customer Service and to see the list of finalists in all categories, visit www.StevieAwards.com/Sales.  

Filed Under: Awards, Customer, FutureProof, Protect, Service, Stevie, Warrantech

The 3 C’s: Tips for Purchasing a Vehicle Service Contract

By: Jeff Hatch

January 04, 2018

Purchasing a vehicle service contract can be a confusing and intimidating process. There’s a lot to consider and, in some cases, a lot of money involved. That’s why we’re here to help take the guesswork out of the decision-making process and make sure you get exactly what you’re looking for. It’s easy. All you have to do is remember the three C’s of service contracts – cost, coverage and commitment.


Cost

First, you’ll want to determine if the car is worth the added investment. Do you plan on putting a lot of miles on it? Does the particular make and model have a history of needing frequent repairs? 

You’ll also want to keep in mind that just because a plan is cheaper, that doesn’t mean that it’s better. In some cases, a company might sell you a less expensive plan that doesn’t provide the same level of coverage. Look for a good service contract that can offer you exceptional long-term savings and value. A few things to consider in association with the cost of your plan include: 

24-hour technical assistance and access to qualified service professionals 

Value-added extras such as discounts on hotels and restaurants, rental car benefits, locksmith services and 24-hour roadside assistance 

Paying in advance could save you money later at the time of service 

In some cases, a service plan can pay for itself in just one repair


Coverage

Next, consider the vehicle type and the best type of coverage for it. For instance, if you have a vehicle that you intend to keep for long time, you’ll want a plan that takes high mileage into account. At the opposite end of that spectrum, if you simply want to protect your vehicle’s appearance, a supplementary protection plan is probably in your best interest. Warrantech has several options you can choose from that encompass a wide variety of services:

CustomEdge Plus – Provides you with the flexibility to pick your plan, length of coverage, miles of coverage and deductible

RepairMaster Service Drive – Complete coverage for cars, trucks and SUVs

MileEdge – Perfect for unpredictable, high-mileage vehicles, this plan covers costs associated with an automobile breakdown

SecureEdge – Covers costs to repair or replace any breakdown of parts, except engine, turbocharger/supercharger, transmission, transfer case and drive axle components

OwnerEdge – Offers powertrain vehicle protection

PowerEdge – For motorcycles, scooters, ATVs, snowmobiles and other recreational vehicles 

CampersEdge – For motorhomes, travel trailers, fifth wheels, pop-ups and slide-ins


Commitment

Finally, keep in mind that as the owner of the service contract, you are responsible for fulfilling the terms and conditions outlined within. As such, you’ll want to: 

Read the contract paperwork carefully and make sure you understand the coverages and exclusions

Follow all the manufacturer’s recommendations for routine maintenance. Failure to comply with these requirements could void the contract

Register your plan online if the provider has a website page that allows you to do so

Keep your contract paperwork, receipts, maintenance reports and contact numbers in a safe place where you can easily access them. This will make ownership and claim submission simple and easy

To learn more about our vehicle service contracts, visit warrantech.com 

Filed Under: commitment, contract, cost, coverage, service, vehicle, Warrantech