Apr. 6, 2009 – A task that falls under the ‘good things we used to do’ category
April 6, 2009
Filed under Columns
You will be reading this in April and in nearly all parts of the country you are in the prime motorcycle “buying” season. I have recently been stressing that the “selling” season is 12 months long, as dealers even in the coldest part of the country have been proving that motorcycles can be sold in the winter time.
It does take a lot more time, effort and energy when you have to drive rather than respond. The sales labor cost in the winter is more than double the “buying” season cost. The incremental sales do cover the cost, but the real benefit accrues when you have a sales team functioning at full strength, and dialed into a sales process that includes follow up when the buyers turn up in larger numbers. Since it is April I hope this column finds you at full strength and making the most out of what business is out there.
Dealers I have ongoing contact with, who I believe maintain creditable floor traffic information, are reporting (through mid-March) traffic equal to 2008. However, the sales conversion rate, even with the strongest sales effort, is down. The harsh reality is potential customers who could in the past obtain financing do not qualify in 2009.
National lenders tend to group consumers in tiers. The credit score is a major component, but there are other factors. Generally there are six tiers. One and two have never been a problem and we never have had funding for tier six customers. The problem now is that tier five, four and even three have become a challenge. As I talk to dealers and sales managers few lament the loss of the sub-prime business, but all are alarmed at the number of what had always been qualified buyers whom they cannot get financing for.
We have to work harder than ever at finding additional and truly more appropriate sources of funding. National sources, including OEM-backed, rely primarily on scoring. Getting consideration outside of current established underwriting criteria from a national lender is much harder than it used to be. What is improving faster than the national sources are the local lenders seeking to put money out locally. Local banks and credit unions will give credence to ties to the community that a national lender does not consider. It takes more work than simply faxing a credit application to your regular national source. F&I managers need to be focused on the “F” (finance) part of the job.
The “new” local sources pop up every day. When a customer comes in with a check from a local credit union or bank, take time to contact that source. Confirm the lien holder address, provide a contact name if there is any question on a title, then do two important things: 1. Find out what is their appetite for loans and what is their criteria. 2. Let them know you will take very good care of their customers wishing to buy a motorcycle, ATV, PWC, snowmobile or whatever you offer. This, by the way, is not new thinking. It comes under the heading of “good things we used to do” back before there was Harley credit or Honda finance.
The other new source of business are the hard ones we used to not have time for. Tier one and two folks have that high rating because they are good at managing their money. They are conservative and are not easily seduced when it comes to parting with money for a toy. These people are quick to say “just looking” and are promptly ignored by sales people spending all their time with the easy buyers who agree with everything said to them and can’t get financed.
A great comment was made by a manager at our Harley Performance Group meeting in March: If they say “just looking,” the greeting failed. The point being, if you were focused and prepared to provide a quality experience to a showroom visitor, the customer would not have provided a defensive response. If we know that the good credit worthy buyers are always just looking, we should be prepared to make them feel welcome and provide the six requisite messages:
1. Motorcycles are fun.
2. Ours is the brand.
3. We are the dealer.
4. It is easy to buy.
5. The time is now.
6. We really want your trade.
There simply is not a short cut with good buyers. Not that there ever has been. It is just that when we could get all of the easy buyers financed, we did not have the need to work this hard. We do now.
Cheers, Ed. psb
Ed Lemco has been involved with the powersports industry for more than 30 years. Lemco, the former owner of Lemco Management Group, is the founder and executive director of the National Council of Motorcycle Dealer Associations. Lemco currently operates a call center for dealers in St Croix.