Spread The Word

By: Jeff Hatch

May 10, 2017

To Succeed in the Lucrative CPO Market, You Need to Make a Commitment – and Make Sure Your Customers Know It
 
As many as 60 percent of all pre-owned customers are interested in seeing a certified vehicle, and the CPO market continues to grow – 2016 was the sixth consecutive year of record CPO sales. 
 
Those statistics lead to an important question dealers should be asking themselves: “How can I get my share of that segment?” 
 
It’s simple. Find a certified pre-owned program you like and start advertising. 
 
When starting a certified pre-owned program, it is best to remember a saying I once read in a fortune cookie: “Who saw the antelope jump in the forest?” 
 
That might sound silly, but it points out that while few of us will ever see an antelope jump in the forest, everyone can visualize it because they have read and seen pictures. No event can be widely known and accepted unless it is publicized with a message broadcast to the public.
 
That’s the message of that supposedly ancient Chinese proverb. If you want your program to succeed, you must be ready to broadcast your commitment loudly and constantly to everyone.
 
When deciding on a CPO program, the gains must be weighed against the costs. And the best way to achieve a positive in that equation is to make a full commitment to the program. 
 
Your commitment needs to be accepted by everyone involved – your employees, customers and even the people you get your inventory from. 
 
In order to broadcast that commitment, you must analyze why you are starting this project in the first place. 
 
In the car business it is always about profit, which usually comes from selling more vehicles or making more on the ones that we sell. For dealers, that is the purpose of a certified pre-owned program.
 
The logical first step is to analyze what commitment you are making. 
 
In some cases a dealer will be changing his market niche to a certified pre-owned inventory or elevating his inventory to more current models. Most dealers, though, will still be acquiring the same type of inventory, and will most certainly be getting it from the same places. 
 
For them, the commitment isn’t to better cars or inventory. Rather, it’s to providing a better ownership experience for the customer. 
 
CPO accomplishes that by backing what customers purchase in a manner that gives them the peace of mind that they did the right thing by buying the vehicle from the dealer that they purchased from. 
 
That’s a long way of saying the commitment is just the right thing to do.
 
And if you are going to do the right thing, you might as well do it the right way. When looking at CPO, you need to have a program that follows three main criteria in governing the quality of the warranty. 
 
First, you must have an administrator that has the capacity and desire to pay claims promptly. That is easily ascertained by looking at the administrator’s other customers. You’ll want to partner with someone who has partnered with the giants in your industry. 
 
Second, the idea of CPO is to sell more cars and create more repeat business. That means the CPO program you commit to must have an unremitting drive to customer service. 
 
Remember, the customers who interact with your claims administrator are going to be in what is for them a crisis situation. When it comes to encouraging repeat business, it’s here the difference in warranty companies is felt. 
 
The third criterion is name recognition. Not simply because the name is recognized, but because the name is known or can be explained as synonymous with high ethics in the used car business. 
 
Once you have found that, you’ll have something worth broadcasting.  
 
When a dealer makes a commitment to any program, it is critical to the success of the program to broadcast it to the widest audience. The beginnings of success depend on how this project is presented to all parties. 
 
Studies show that resolutions of any kind made in quiet are not as successful as those that are written, posted and told to as many people as possible.
 
Kevin Corley, owner of Second Chance Auto in Charleston, S.C., recently made the CPO commitment. He chose to use the NIADA Certified Pre-Owned program because it provided the necessary three criteria.
 
Since General Motors and Microsoft had done due diligence on the administrator, he felt he could trust it to pay claims. He found the principles NIADA was founded on mirrored his. And he saw the NIADA shield would be recognizable in his advertising media, helping to brand him as a certified pre-owned dealer.  
 
Once Corley had made his commitment, he wanted to make sure that everyone knew what he now represented at his car lot. 
 
“Kevin is so excited about representing this program,” said Mike Sims, an NIADA CPO program representative, “that we actually baked a cake.” 
 
Corley demonstrated his commitment in a meeting with his entire company. In that meeting, he expressed his wish for the employees to embrace the program – and he capped the meeting with the aforementioned NIADA-themed cake. 
 
He explained that when you start a program with a special event like the cake ceremony, the employees know it is different – and a very important.
 
Once he had announced the program to his people, Corley immediately wanted to get the word out to his clients. So he broadcast the announcement of his new program on his number one marketing tool, Facebook Live, from which he can broadcast his entire operation to the customers – from coming off the truck through make-ready to on the lot. 
 
The result?
 
“We had 363 likes from broadcasting the cake ceremony in a matter of minutes,” said Corley. “The thing is, if they are watching on Facebook Live, they are in the market to buy a car, whether they know it or not.” 
 
Second Chance Finance Manager Milan Edwards said the Facebook broadcasts make a big impact on consumers.
 
“By the time customers watch a car go through the inspection process – the cleanup process, even pulling the car off of the truck – on the Facebook Live broadcast, they are ready to belong to something special,” she said. 
 
“Since the store has been involved with NIADA Certified Pre-Owned, we’ve sold 26 vehicles. Nine of those were CPO deals that would have gone somewhere else had we not notified our constituents of our commitment to this program.” 
 
Donald Holt, Edwards’ associate in the finance department, pointed out that only one of those nine early CPO sales was hesitant to extend the warranty protection with an extended service contract.
 
“And her husband was a mechanic,” he said. “Once they know the program, it is not selling to get them to do the upsell. It’s just filling out the paper work.”
 
Making sure the public knows about your commitment to their vehicle purchase is important in driving customers from the Internet to your car lot. 
 
Having vehicles marked as certified pre-owned on your dealership website is a good start. A deeper dive is using a CPO program that coordinates with websites such as Carfax or eBay. When you post your CPOs and they show up at the top of the selection criteria because of certification, it allows you to charge into the growing millennial CPO market.
 
Dealers can also broadcast their commitment to CPO by emphasizing the program in their lot decorations.
 
“NIADA Certified is actually a full marketing program that allows the dealer to maximize exposure to the public of his certified pre-owned program,” Sims said, including numerous marketing materials to dress the lot for the success of the program. 
 
Corley’s business partner Derrick Middleton said the pole banners provided by the NIADA program “create an atmosphere or excitement and tell the customer we have cars that have been given special consideration.”
 
And that excitement, combined with a strong CPO program, can give independent dealers a boost in their competition with franchise dealers for market share, said Natalie Suarez, national director of the NIADA program for administrator Warrantech. 
 
“Those dealers who fully commit to a program such as this find that the more they promote the certified pre-owned concept, the easier it is to compete with the local new vehicle franchises for certified buyers,” she said. 
 
“When they are part of the NIADA program and use their online and on-lot methods of marketing their vehicle as certified, dealers see an increase in all traffic – phone, Internet, appointment and walk up.” 
 
Dealers who have been successful in implementing programs such as NIADA’s say it is extremely important to get the information out to your potential customers before they are looking so they know they can find a certified pre-owned vehicle on your lot. 
 
And, they say, it is equally important to continue to broadcast the program’s benefits once the customer is on the lot. 
 
Auction Direct USA is one of the nation’s largest used vehicle operations, with stores in Rochester, N.Y., Raleigh, N.C., and Jacksonville, Fla. In 2016, its managing partner, Todd Hoagey, was named NIADA’s CPO Dealer of the Year. 
 
Broadcasting its commitment to NIADA Certified Pre-Owned has been incorporated into the dealership’s sales system. 
 
When customers arrive at Auction Direct they are met by a salesperson who “walks their wall.” The wall shows the story of the store, including how and why Auction Direct adopted its marketing system. And it all starts with the commitment the store makes to the customer through the CPO program. 
 
“Starting the sales process with the certified pre-owned explanation is integral in establishing a trust between us and our customers,” Hoagey said. “It makes it clear up front that this store is special and the customer can feel safe with our process.” 
 
One way to advertise the program is to dress the cars on the lot to identify them as having gone through the 125-point inspection required for NIADA certification. That can be accomplished with windshield banners that are visible from the street, as well as mirror hangtags that remind customers the vehicle has been through a special process and therefore is provided with coverage that most pre-owned vehicles don’t have. 
 
So who saw the antelope jump in the forest? 
 
Almost no one. But through broadcasting the beauty of the event, everyone knows about it. 
When you broadcast in all of your media – Internet, newspaper and radio/TV ads, on your cars, in your sales process – you can get that all-important bump in sales. 
 
“Once customers know about this program, why would they shop anywhere else?” Second Chance Auto’s Milan Edwards said. 
 
The key is making sure your potential customers know about the program and your commitment to their ownership experience. That includes consistent messaging and using identifiable logos that flow throughout your advertising, allowing you to be successful by branding yourself as a dealer customers can count on.   
 
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/2q1lEsz 

Filed Under: automotive, Carr, certified, CPO, dealership, NIADA, pre-owned, sales, William