If you’ve purchased a new or used vehicle from your local car dealer in the last 30 years or so, you might have noticed a charge on the buyers order that didn’t make a hole lot of sense. The name could be a variation of Dealer Service Fees, DOC Fees (Documentation Fees), Dealer Preparation Fee, or the like. So a couple of questions first: First, do the fees cover in terms of the dealers expenses? Secondly, how much are the fees? And lastly, do you have to pay the fees?

“What Exactly is the Fee?”

The fee covers the dealers internal cost for myriad expenses related to the processing of each car deal (retail and wholesale) that’s processed through the dealership. Below is a conglomeration of what the fees equate to:

• Credit Reports: Car Dealers run 100′s of credit reports each month from all the customers that buy or want to buy vehicles. Each time they run a report that’s a cost they incur.
• Overnight Paperwork: When a deal is finalized at the dealership, the dealership has to overnight the paperwork to the bank. Over the course of a month, those costs will add up.
• Dealer Trades: Throughout any given month, car dealers swap vehicles with one another. There are cost involved with these trades especially if the vehicle is several hundred miles away which can be quite common.
• Power of Attorney: Power of Attorney’s are used to transfer title on new and used vehicles regarding the transaction.
• Secure Power of Attorney: A secure Power of Attorney are used specifically in transferring title on trade-ins.
• Restocking Fees: Not all vehicles that are delivered by a car dealer are signed, sealed and delivered deals. In some cases they deliver vehicles, but then end up having to take the vehicle back because the financing fell through. There are fees associated with restocking the vehicle that they take back.
• Floor Plan: Most car dealers have to “Floor Plan” (loans from banks for inventory) their vehicles in that they don’t have 10 Million dollars laying around to buy their inventory. If a dealer has 500 (new & used) vehicles in stock that are all floor planned, interest charges on each vehicle are charged on a daily basis. These fees can run into the thousands of dollars each month.
• PDI: Pre Delivery Inspections are required on all new vehicles that the manufacture sends the dealer each month. This insures that once the customer purchases the vehicle, that the vehicle has been inspected by a Certified Mechanic to hedge against any issues.
• Wholesale: Not all the trade-ins that a car dealer receives are vehicles that they turn around and sell retail. There are fees associated with wholesaling the trades that aren’t retailed.

“How Much are the Fees?”

The fees can vary from dealership to dealership providing they reside in a state/county that aren’t regulated by state or local laws. In a select few states the fees are dictated by law and can only be as much as the law specifies. Check you local state and county to see if dealers in your area are governed in terms of additional fees. If the dealers are governed in your area, then you’ll know exactly where you stand.

However, in the majority of the states the dealers can charge as much as they want, or what the market is in their area. In some areas the fees could be $300-400, while other areas the fees could be as much as $600-700. Why the disparity? It all depends on the market. If you live in an area where the fees aren’t regulated, then the dealers will set the fee as high as the market will bear. If the majority of the dealers are charging $395 for their DOC Fees, it might be hard for a dealer to charge $795 in that same area.

“Do You Have to Pay the Fees?”

The answer to that question is a politically correct “Yes and No” answer. Although there is more weight on the yes than the no, at the end of the day if you object to paying the fee that opens up the door for additional negotiations. Let’s roll play this out in real time…

Mr. Jones is negotiating a deal on a new Toyota Camry LE. The sticker price is $24,995, but Mr. Jones agrees to the dealers offer of $21, 452 + + + (taxes, title & fees). He’s thrilled that he bought the vehicle under the invoice price of $21,989, but when the paperwork is put before him the taxes, title and fees are disclosed. He sees a DOC fee of $795, and proceeds to come unglued. “What’s this for” Mr. Jones barks at the salesperson. The salesperson proceeds to try and justify the lofty fees with some of the above stated reasons of the fees.

But Mr. Jones isn’t buying any of it, and says, “You either eliminate that fee, or I’m eliminating this deal.” So the dealership has a choice to make…Can they cut the price of the deal another $795 (the DOC fee is figured into the overall profit margin of the vehicles)? More than likely they will eat the $795 and put the deal together, but nothing is ever written in stone when it comes to buying cars.

However, if they decide to eat the $795 they need to take it off the price of the vehicle. Legally, (this could be open to interpretation of the law) the dealership can’t eliminate the fee from the buyers order as they could be put in position to refund previously charged DOC fees to past customers. If Mr. Jones is objecting to the $795 fee, and states that the dealership either removes the fee or he’s walking, then the dealership would need to take an additional $795 off the price of the vehicle thereby leaving the fee on the buyers order. So at the end of the day, Mr. Jones still paid the DOC fee, but he got the vehicle for $795 less than what he originally negotiated.

“Conclusion”

Additional dealer fees are apart of doing business when purchasing a new or used vehicle from you local friendly neighborhood car dealer. If you are in a state where the fees are regulated then they are what they are, and you will have to pay them (although that’s not totally true because you could still object to paying them). If they aren’t regulated then you could be like Mr. Jones and enter into further negotiations. But depending on what kind of a deal you ended up getting, the dealer could tell you to take a hike. Losing an additional $600-700 might be more than they will want to absorb on the profit margin of the vehicle so they might tell you “take it or leave it.”

If you’ve bought vehicles from your friendly neighborhood car dealer over the years, you’ve undoubtedly heard the term “Low Ball.”  What exactly is a “low ball” and how does it come into play when purchasing a new vehicle? Quite frankly, low ball is a term that can give a dealer a bad name and reputation.

However if the low ball is executed by the right salesperson  it can also sell them more vehicles for the dealership. It all boils down to this: Do they want to sell more cars and chance a bad reputation, or possibly lose some deals and perhaps save their reputation? I think some dealers think they’ll get a bad reputation no matter what they do by nature of the business. “So what if a few more people talk trash about us, but at the same time we’ll sell more vehicles?” For many dealers it’s all about the bottom line, and if they can increase the bottom line in a positive fashion then low balling a customer is part of their everyday business.

Low Balls essentially are misleading figures (okay, a flat out lie) on either a new vehicle or a used vehicle (mostly on new vehicles). So how exactly do they work, and how can they sell more vehicles for a car dealership. Let’s take a look at the classic low ball scenerio.

“The Low Ball”

The last thing anyone wants to experience is being used. As a car salesperson, they are in position to be used and abused on a daily basis by the buying public. Customers will come into a car dealership with one thing in mind which is to get a legitimate price on a vehicle that they are interested in purchasing. Their strategy is to then go to another dealership (or call) to see if they can beat the price they have. This process could go on to several dealerships until the customer thinks they have the best possible price. So in other words, this type of customer was essentially using each salesperson that they talked with to get a legitimate price only to use the same process with another salesperson.

As a salesperson, how do you avoid being used in that situation? If a customer comes in, and they say they are shopping but aren’t ready to buy, (although they want a legitimate price that they can buy the car for), the salesperson knows if they give them a price they will never see them again because literally every price can be beaten. And some customers will buy from a different dealership for a $100 better deal.

When  a customer comes in and isn’t ready to buy, but they want a price (your best price that is) that they can buy the car for, the dealership has three options: Option I: They can give them a legitimate price, but chances of them actually buying a vehicle from that dealership are slim to nil. Option II: Is not to give them a price until they are ready to buy. Chances of that dealership seeing that customer are also slim to nil. Option III: Is to low ball the customer. By low balling the customer the dealership increases the chances of either seeing or hearing from that customer again, which in turn increases the chances of that dealership selling a vehicle. Let me set the stage and role play this out in real time…

“The Price Shopper”

Mr. and Mrs. Jones are in the market to buy a new Nissan Altima 4 Door SL. The MSRP on the vehicle is $21,330, and the invoice is $20,479. Additionally there is a $1,500 manufacture to customer rebate on a 2012 Nissan Altima (at the time of this writing).

Mr. and Mrs. Jones take a visit to their friendly neighborhood Nissan dealer. They tell their salesperson that they are very interested in the Altima, but aren’t ready to buy today. Mr. Jones states to his salesperson, “We’re a couple weeks from making a final decision, but what’s your best price on that car?” The salesperson knows that if he gives Mr. Jones a legitimate price he’ll never see him again. He also assumes that if he tells Mr. Jones that he’ll get the best price when he’s ready to buy (in other words, he won’t give him a price), he won’t see him again either.

So Mr. Smart and savvy salesperson decides to “Low Ball” Mr. Jones almost guaranteeing that he’ll see him again somewhere down the road.  The price that he quotes Mr. Jones is an astounding price of $15,995, which is over $4,000 under the invoice price. This deal represents a huge loss for the dealer (although it’s not anywhere close to $4,000) if they would sell the vehicle for that price.

Mr. Jones calls or visits a few other dealerships to see if he can beat the $15,995 figure. He’s told by the other dealers that there is no way he can buy the car for that price. Maybe he goes to or calls three other stores. By the time he hears it for the third or fourth time, he figures that it must be a deal.

“The Return Visit”

By the time Mr. Jones returns to the dealer that gave him the unbeatable low ball price, he’s invested several hours in the car buying process. The other stores that he went to undoubtedly tried their best to close the deal and earn his business while he was there. Their objective was to try and convince Mr. Jones that he can’t buy the vehicle for $15,995, and that it would probably be a few thousand dollars more. That whole process can be not only time consuming, but very aggravating in that the other stores were trying to persuade him to buy while he was there. That whole process can be stressful as well. By the time Mr. Jones comes back to the store that low balled him, he is worn out and ready to buy. This plays into what’s about to transpire when Mr. Jones returns to the low balling dealership.

“Bomb Dropping Time”

When Mr. Jones returns to the dealership that gave him the low ball figure, he’s ready to make the deal at the quoted price of $15,995. However, he’s about to be disappointed when the salesperson tells him that “some things have changed” since his last visit. At this point the salesperson knows he has a major challenge on his hands because he knows he can’t sell the car for $15,995. But he also knows that if he plays his cards right, he can still make a sales which is what his whole game was about. “Send Mr. Jones out with such a low ball price that nobody in town will do the deal. When he comes back I’ll have the opportunity to make a deal.” So far the strategy has worked to a tee. Mr. Jones is back and ready to buy, the problem is there is about to be confrontation in that the salesperson is about to drop a bomb on Mr. Jones.

“What Happens Next?”

This sale will be made depending on a few variables. First is the salesperson. The stronger, more persuasive the salesperson is in handling a potentially vicious situation the better the chance he has of making this deal. The second variable is how worn out is Mr. Jones? He’s spent time and effort going to several dealerships trying to get the “best price.” More than likely he’s at the end of his rope, and doesn’t want to go to another dealership. If that’s the case, this will be an easy sale for the salesperson.

The salesperson has several ways in which he can bump Mr. Jones to a higher price while at the same time justifying the bump. The first is the car. The salesperson could say that the car he quoted the price on was sold. Of course Mr. Jones will say, “You have others that are exactly the same. You can sell me one of those.” But of course the salesperson could say, “That particular car was an old age unit that the Manager wanted to sell, and he put a special low price on that one. That was the only one I had at that price. I can sell you the same exact car, but it will be a little more.” “How much more” Mr. Jones scoffs. “Not much Sir. Let’s go out and find the exact one you’re looking for and I’ll make sure I get the numbers right for you. Fair enough?”

So now the salesperson goes out with Mr. Jones to find the exact car he’s looking for. They drive the car to make sure it’s free of defects which it is. In the meantime, while the two were conversing, it just so happened that the salesperson and Mr. Jones discovered that they were both born and raised in the same hometown. They actually went to the same high school, but since there was an age difference of 10 years they never knew each other. The two have forged a common bond based on being from the same home town.

When they get to the closing table they are holding hands…

No not really. Just wanted to see if you’re still reading this…Lol.

“Time to Close the Deal”

But when they sit down to talk about price, they are sitting down with a much stronger bond then what they had originally. The sales person tells Mr. Jones that the price of this vehicle is…

$18,979!!! That’s almost a $3,000 price bump from $15,995. Now Mr. Jones is going to be a little distraught being told that he needs to shell out almost $3,000 more than originally quoted. But guess what? He’s tired from all the car shopping. He’s build some rapport with the salesperson, and the price that he was just quoted is in line with the other prices he got from the other dealers. Deal Closed!

“Conclusion”

Low balling can be an effective way for a salesperson to make a deal. But keep in mind, not all scenarios turn out this way. It’s an aggressive “hard ball” way of selling, but if pulled off correctly it does work.

In the annals of trading your current vehicle in for the new car that you’ve had your heart set on, you’re probably heard different verbiage in terms of  your trade vehicle. There are basically 3 different terms that swirl around a car dealership when it comes to trade-ins. The 3 are as follows: Trade Value, Trade Allowance and A.C.V (aka, actual cash value). The question is, “what’s the difference between the three, or is there a difference between the three?”

“Trade Value”

Trade value is the one term that you’ve probably heard the most. If you’re purchasing a new or used vehicle and have a trade, the dealer might tell you that your “trade value is $10,000. The question you might have is what does that figure represent, and where is it derived from? Chances are it comes from a conglomeration of different sources like Kelly Blue Book, Edmunds.com, the main resource dealers use, Black Book, and maybe some other online sources.  However, whichever source the figure comes from, in most cases the customer will say its “too low, or not enough.”

Maybe it’s low, but maybe it’s not. Like the price of the new or used vehicle, the trade represents a situation where “horse trading” can take place. The old saying “everything is negotiable” holds true especially in a car dealership. If the “trade value” figure that the dealer quotes you isn’t what you think it should be then you can always ask for more. If they are aggressive, and need to put a deal together chances are you’ll get more that what was originally quoted.

“Trade Allowance”

The next term that you might hear is what’s called “Trade Allowance.” Typically, the term trade allowance will be used more when the customer is in a shopping mode. If, for example a customer is shopping price the dealer will quote the customer a trade allowance figure on the trade especially if the customer is looking for a ridiculously high trade figure. “We’ll allow you ________ for your trade” the dealer will tell the customer.

That trade allowance figure will more times than not be higher than a quote for a trade value figure. Not to be confusing, but the trade allowance figure and the trade value figure could possibly be the same. However, neither term represents what the dealer is actually paying for the vehicle or booking the vehicle into their used car inventory. In other words, if you consummate your car deal, and your paperwork states a trade figure of $10,000, that figure in most cases won’t represent what the dealer is booking the car into their used car inventory. That term is classified as A.C.V., or Actual Cash Value.

“A.C.V.”

What exactly is the difference between A.C.V. and trade allowance or trade value then? If neither trade allowance or trade value represent what the dealer actually books the trade into inventory, then why do they even quote those figures? In many cases the dealer needs to quote a figure in terms of the trade that is acceptable to the customer. The customer might tell the dealer that unless they get $12,000 for the trade then there is no deal. In order to put the deal together, the dealer might give the customer the $12,000 as a trade value, but the A.C.V. might only be $9,500. That means there is a $2,500 deficit between the A.C.V. and the trade value which means there has to be a $2,500 concession on the new (or used) vehicle purchase. So even if the customers paper work said $12,000 as far as a trade value, the booked in value to the used car inventory is only $9,500. Another way to look at this is the $2,500 came off the new car price. Here’s an example to illustrate:

New Vehicle List Price: $25,000. Trade Value Proposed to Customer: $9,000. Customer Agreed Upon Trade-In Value: $12,000. A.C.V.: $9,000. Since the trade value that was agreed upon by the customer was $12,000 and the A.C.V. was $9,000, that essentially means the customer got a $3,000 discount off the price of the new car vehicle purchase, or got the vehicle for $22,000. The dealer over allowed on the trade by $3,000 which means the dealer lost $3,000 in profit on the sale of the new vehicle. But did they really lose $3,000? The answer is yes, and no. Here’s what I mean:

Let’s say in the above example, the cost on the new vehicle is $21,000. Here’s how’d you figure the dealers profit on the sale of the new vehicle. The selling price is $25,000 minus the trade value of $12,000, plus the A.C.V. of $9,000 minus the cost equals the profit. Here it is in black and white:

$25,000 – $12,000 = $13,000 + $9,000 = $22,000 – $21,000 = $1,000 profit.

“Conclusion”

The difference between the trade value, trade allowance and A.C.V. boils down to this: Actual Cash Value (A.C.V.), is the actual figure of what the dealer books a vehicle into their inventory. Trade value and trade allowance are arbitrary figures for the most part that represent a fictitious number for a trade-in (remember there are exceptions to every rule). A.C.V. is essentially cash as if you’re handing the dealer a pile of cash. If you could turn your trade into a pile of cash that’s the Actual Cash Value of a trade. Trade value and trade allowance don’t (in almost all cases) represent the booked in value of the trade into the dealers inventory.

In my last post, I talked about how you can have a job on straight commission and have a guarantee at the same time. In this post I’m going to take it out one step further to show you how to make $100,000 selling cars. I’m not the first to write on this subject, but based on my research I do have a unique twist on how to get to that elusive six figure level selling automobiles.

“Three Ingredients That All the Gurus Don’t Mention”

If you’ve read a book or two on this subject there are a couple of ingredients that the so called gurus don’t mention to achieve this goal. The first is you need to work for a dealer that knows what they are doing in terms of making profit.  In other words, if you’re working for a dealer that is souly focused on volume and not gross then you’ll a much harder time reaching $100,000 in gross income.

Secondly, the dealership needs to generate traffic with their advertising to drive potential customers to your store. No traffic means less opportunity to sell which means it will make it tough to achieve the six figure goal. You need to be in a store that has plenty of people to speak with on a consistent monthly basis.

Thirdly, you need a pay plan that will reward you for units and gross profit. You shouldn’t have to sell 30 units a month to make $10,000 for the month. You should be able to make $8,000-9,000 a month by selling 15 units providing that the dealer is selling units and making gross profit on what they are selling.

Here’s what I mean in black and white: Suppose that you’re working for a dealership that is averaging $1,600 on front end gross profit on all the new and used vehicles sold (the sale of the vehicle non inclusive on what they make on the financing minus pack). Since the salesperson gets paid a percentage of the front end gross profit, we’ll use that $2,000 figure for this example.

“Salesperson’s Pay Plan”

Here’s an example of a pay plan where a salesperson could make some serious money with:

Unit Percentage:            Unit Bonus:
0-7.5 =     20%                     10 Units = $500.00
8-13.5 =   25%                     15 Units = $750.00
14-18.5 = 30%                     20 Units = $1,500.00
19-28.5 = 35%                     26 Units = $3,000.00
29 + =     40%

The goal is to make six figures with the above example. That equates to about $8,300 a month. I’ll work this example backwards so you can see the big picture…

With the above numbers and pay plan you’d have to average 15 units a month for 12 months to hit the $100,000 mark. Here’s the math:

Selling 15 units will put you in the 30% category in terms of unit percentage. So the math would look like this: $1,600 profit X 30% = $480 per unit X 15 units = $7,200.00. In addition to the $7,200.00, you’d get a $500 bonus for hitting 10 units and another $750.00 for hitting 15 units or $1,250 in bonus money. That’s $8,4500 per month which equals to $101,400 for the year.

“More Numbers of the Equation”

The next question is, “How many people do you have to talk to in order to sell 15 units per month?” Assuming a 20% closing ratio, meaning that for every 10 people you speak to, you’ll sell two units, that means you need to speak with 70 people for the month (70 X 20% = 15).

Using March 2012 as an example month, and assuming that you’d work 26 out of the 31 days, that means you’d need to speak with 2.69 people a day, or about 17 people per week. The next question is, “How realistic is it to see 17 people in a week?” Saturday is the busiest day of the week, and you could easily see 4-5 people. Sunday’s are also busy days in terms of walk-ins, and you could see 3-4 people on a Sunday. Let’s just go with 8 for Saturday and Sunday. That would mean you’d need to see 9 people in 4 day’s during the week. Pretty doable don’t ya think?

It all boils down to raw numbers, but it all starts with getting in front of somebody to sell a vehicle to. See 70 people; close 20% that equals 15 units sold, and based on the above pay plan that’s almost $8,500 for the month.

“Conclusion”

You don’t need a degree in Rocket Science in order to make $100,000 a year selling cars. All you really need is a dealership that drives consistent traffic to their store. When the customers make the buying decision, the dealership makes a reasonable profit margin on what they sell. And then they have a pay plan set in place in order to make money with. After that, it’s all about the person. You have to have the right ingredients as a person in order to execute the above numbers. If you don’t, you won’t achieve the goal.

Working on commission versus a set salary or an hourly wage is like night versus day. With a set salary or an hourly wage, you know exactly what you will make every week, hence you’ll know exactly what your take home pay will represent. Working on commission on the other hand could be a major crap shoot because there really are no guarantees that you’ll even make a dime.

Knowing exactly what your take home is each month gives most people a sense of relief in that they can budget in a more effective way as opposed to commission sales. How can you budget on commission when you don’t have a clue on what you’ll make from one month to the next?

The logical answer is you can’t. But the real answer is you can if you’re smart with your money, and are disciplined to the point of living on less than you make. I’ll address that point later, but first let me share with you that working on commission can carry with it a level of a guaranteed wage.

“Lookin For a Job?”

If you’re in the job market right now looking for that career move, or just a job to pay the bills, what are your options? What kind of guarantee is out there? Let’s say you could find a guaranteed salaried position for $40,000 a year or a comparable hourly rate that would pay the same. How secure is that job? What are the chances of you getting a 20-30% raise in the next 12 months? What are your chances for advancement in the next 12-24 months?

I’d say the answer to the first question about job security is not very much in terms of security. There isn’t a whole lot of that these days. And getting a 20-30% raise in the next 12 months is also a pipe dream. For most companies regarding advancement, it takes several years to go anywhere.

I say go sell cars at your local friendly neighborhood car dealership, and make more than the guaranteed $45,000 a year job, have the opportunity to get a 30% raise (or even more) the following year, and have a realistic chance to get promoted into management in less than 24 months.

“Your Guaranteed Commissions”

Let’s take a look at the car business on how you are actually guaranteed to make money. First of all if you’re on a commission based pay plan, you don’t get paid for punching a clock or for showing up. You get paid for producing sales, so if you don’t sell you don’t make anything, but if you do sell you can make big paychecks. If you come to work, but don’t work you won’t make anything either. You have to WORK. So what is work in the car business? In the beginning, it means getting in front of customers that are coming in to look at your vehicles.

If you get in front of enough people, you will sell cars assuming that you have some sales ability, and are able to follow your dealerships process for selling a vehicle which can all be learned.

So let’s say that you do have average abilities and talents, but you have a burning desire to be successful in your new endeavor of selling new and used vehicles. You’ve learned your dealerships selling process, and you somewhat know some product knowledge. Now it’s just a matter of working which like I stated above is getting in front of customers that are coming to your lot to inquire about your vehicles.

Let’s assume that it’s the first of a new month, and you’re going to put in action all that you’ve learned of how to get the ball rolling in commissions. You’ve decided that you’re going to work 26 days for the month and take the remainder 4 days off (basically working 6 days each week and having 1 day off).

“Let’s Break it Down”

How many people can you speak to in the next 26 days? Let’s say that you’re going to take Wednesday off each week as your day off. So for Monday, Tuesday, Thursday, and Friday let’s say that you can speak with 7 fresh customers. Saturday and Sunday are the busiest days in which you could probably get in front of 7 fresh customers in those two days; that’s 14 for the week. Assuming you can duplicate that over the next three weeks that’s 56 fresh customers for the month.

The national average closing ratio is 25% for car salespeople, but lets use 20% for purposes of this example. 20% of 56 customers equals 11 sales. The average commission inclusive of bonus’ is going to be between $300-$400. Let’s use $350 as an average which means that you’d make $3,850 for the month. If you were able to duplicate that for 12 consecutive months you’d earn $46,200 for the year.

“So Where is the Guarantee?”

If you’re still wondering how is working on commission at a car dealership a guarantee in terms of income here’s how you can figure it out. Take the amount of money you made for the month which in the above example was $3,850. Then divide that number by the number of people you saw for the month which was 56. 56 divided by $3,850 is a whopping $68.75 per customer. In other words, each customer that you spoke with for the month represented $68.75 in income. Now the guarantee isn’t a guarantee if you don’t work. If you just show up each day, and watch other people work you won’t make a dime. But if you make a concerted effort to go to work and get in front of customers each customer has a specified ROI (return on investment). In the above example, the ROI per customer was almost $69.00

One major advantage of the car business unlike other type of sales is you have a built in prospecting system in that the dealer spends a shit load of money each month to drive customers to the store. As a salesperson, your chief modes of operation is to get in front of your share of customers. Being that each customers represents a guaranteed ROI, your guarantee is money in the bank.

“Real World Versus Hypothetical”

The above example really isn’t real world for the long haul. In other words, you wouldn’t see exactly the same amount of people each month, have the same exact closing ratio, and make the same exact amount of money. You could see more people and make more money and vice verse. It’s conceivable that you could make $10,000 in one month and $1,500 the next month. As mentioned earlier, you need to be smart financially. If you make $10,000 in one month, you need to sock away a big portion so that when you have a lean month, you’ll have some reserves to pay the bills.

“Conclusion”

Working on commission can be somewhat intimidating, and quite frankly scary for some people. Most people don’t like the fact that there isn’t a guarantee income wise when working on commission. If you have that mindset then you’re probably not cut out for commission sales. But if you believe in the above example that each customer represents a monetary sum of money, then you’re on your way to making a good paycheck. Get in front of 50-60 customers a month, and close 20-25% of them and you’ll make a good living. Tap into the repeat and referral market, and you’ll make six figures selling cars.

So you’re thinking about selling cars, and entering in the shark infested waters of the car business? The odds of your success are not favorable, and the chance of failure is much more inauspicious. But it’s not just the car business; most sales environments have a high rate of attrition. The car business probably is higher than most, but at the end of the day if you’re thinking about getting into sales, you need to possess certain qualities or you won’t be selling very long. 

First of all, it you’re thinking that you have to be a “natural born salesperson” to be successful in this business then you are totally wrong. Natural born salespeople are the exception to the rule, and you won’t see any in this business for the most part. Everybody getting into this business has the same opportunity for greatness, so what’s the difference between the ones that make it versus the ones that don’t?

I came up with 5 qualities (there are more, but these are the biggies) that will surely define a quick exit in this business, so if you possess the following qualities, or a majority of these then I’d discourage you from going into car sales or any sales for that matter. On the other hand, if after reading what will surely make someone fail in this business, and you feel that you possess the right ingredients then you should take a serious look at the car business. The first quality for failure is…

“Your Attitude will Determine Your Altitude”

I’m not sure whose quote this is, but your “Attitude will determine your altitude” in the car business. Good attitude equals good results. Average attitude equals average results. Awesome attitude equals awesome results. Bad attitude equals bad results. If your attitude is bad, or if you’re not able to control it when negative things happen to you (and in this business you can run into a plethora of negative situations), chances of your long term success is basically nil. Attitude is the single most important ingredient that you’ll need in order to be successful in sales whether its cars or lemonade. Consequently, a negative or weak attitude will surely be your demise and a quick exit from the business. I rather hire an inexperienced sales person with an outstanding attitude than an experienced salesperson with a “know it all” attitude. My favorite movie quote of all time came from the movie Hard to Kill with Stephen Seagal. Mason Storm (Seagal) said at one point in the movie when he needed to kick some ass, “We’re outgunned, and undermanned. But you know sumpin’? We’ re gonna win. You know why? Superior attitude. Superior state of mind.” I could go on and on here, but I think you get my point.

“Lack of Commitment”

Several people come into the car business or sales with one foot in and one foot out. “I’ll try it and see if I like it” mindset. Or, “I’ll go and sell cars until I can find a real job.” Or, “I’ll go and sell cars while I get my other business profitable. When I get my other business making money then I’ll quit.”  Or, “I’ll sell cars and do something else on the side. God knows I’ll have enough time to do something else.”

If you’re not totally committed to this business, then you’ll never be successful. If your mindset is to come in this business to just try it out then your failure rate is almost 100%. If your coming into this business thinking that you’ll find your real job somewhere down the line, then you’ll obviously be a quick casualty. Oh, and by the way, this is a real job/career opportunity.

If you have another side business that you’re working, and you’re coming into the car business until your business is turning a profit, don’t waste your time (or ours for that matter). You’ll never last.

You have to be totally committed to making this business successful, and have the “I’ll do whatever it takes” attitude in order to accomplish your success. The following example from the short story “Burn your Boats” illustrates what I’m talking about:

“A long while ago, a great warrior faced a situation which made it necessary for him to make a decision which insured his success on the battlefield. He was about to send his armies against a powerful foe, whose men outnumbered his own. He loaded his soldiers into boats, sailed to the enemy’s country, unloaded soldiers and equipment, then gave the order to burn the ships that had carried them. Addressing the men before the first battle, he said, “You see the boats going up in smoke. That means that we cannot leave these shores unless we win! We now have no choice—we win—or we perish!” And of course, they won.

“Can’t Deal With Rejection”

In sales, you have to put up with rejection on a daily basis. The average closing ratio in the car business is about 20% meaning that out of 10 potential selling opportunities, you’ll sell 2. That means you had 8 so called rejections, or people that didn’t buy. Over time having to deal with rejection can take its toll. It will most certainly tie in with the first important factor which is attitude. If you’re not mentally tough to handle the rejection, your attitude will go down the toilet which means you won’t sell squat, which means you won’t make any money, which means your selling career will end quickly.

Finding a way to be able to brush off the rejections of the car business will go a long way in making this a long term career opportunity. You have to understand that it’s just part of the business, and don’t get bent out of shape when people don’t buy from you. Learn from your mistakes, and grow to be a better salesperson.

“Quitter”

Most people that come into the car business end up quitting, as we very rarely fire salespeople; they quit. Quitting comes in different forms too from flat out quitting the job entirely, to quitting on themselves. I think most people that get into this business come to a crossroads at sometime in their career. It could be a bad stretch when they’ve talked to several people, but don’t have any sales to show for their efforts.

The crossroads is simply this: “Should I stay, or should I go?” In other words, they’ve gotten knocked down several times, and their thought process is, “Getting knocked down is tough. I think I’ll just throw in the towel, and save myself the agony.”

At that point, they resign and come up with all types of excuses of why they are leaving. Know this about selling cars, or in any sales…”You will be mentally challenged harder than you’ve ever been in your life. The way in which you are mentally prepared to handle the adversity will surly determine your success or failure in sales.” You have to have thick skin to handle the mental game in sales. If you don’t, you will surely be a causality.

“Don’t Like Work”

Most people don’t like to work, and they’d rather take the path of least resistance. You don’t get paid for showing up at a car dealership; you get paid for producing vehicle sales. If you have a 9-5 mentality, or a clock watching frame of mind that’s a tell tale sign that you don’t like to work. If you don’t like to work, you won’t make it in this business (or most for that matter). On the other hand, it you have an entrepreneur mindset which is you’ll do whatever it takes to make this a successful business then you’re sure to be a success.

“Conclusion”

Selling cars and being in the car business really is pretty easy if you possess the right ingredients, or if you’re willing to cultivate the right mixture of qualities needed for success. It all boils down to sales and making money. If you’re putting in long hours, talking to people, and don’t have any sales to show for your efforts, then the business will be your worst nightmare as it won’t be enjoyable. But on the other hand, if you’re making sales, and making money this business will be a blast. It won’t seem like work, it will seem like play, and who doesn’t want to play especially when you’re getting paid for playing?

So you’re in the market to purchase a new or used vehicle, and you’re contemplating on whether to trade your vehicle into the dealer or sell it yourself privately. Most people know that a car dealer is only going to give you trade value, or wholesale value for your trade-in verses getting retail value by selling it privately. The question is how much is the difference between what the dealer will give you and selling the vehicle privately? $500.00? $1,000.00? $2,000.00? or even more? Suffice to say, if it was only a $500.00 difference or $1,000.00 difference then trading the vehicle into the dealer would probably make more sense.

Let’s look at an example: Suppose you were trading in a 2009 Honda Accord 4 Door LX with an automatic transmission with 36,000 miles. According to NADA online, the retail value on that vehicle is $16,000, and the wholesale or trade-in value is $13,000 assuming the vehicle is in pristine condition. Based on those numbers, if you could get $3,000.00 dollars more by selling the vehicle yourself then that would pretty much be a no brainer. But now the question is can you get $16,000 for the vehicle by selling it yourself?

A cursory look on Autotrader.com revealed that most dealers were listing that vehicle for about $16,900. The key word there is “Listing” or asking price. Are they selling for $16,900? No. So how much will a dealer discount that vehicle? It varies from dealership to dealership, but it’s logical to think that if push came to shove, you could get the car for $14,900 or even less. Even at $14,000 the dealer is still making money, but of course they would most certainly want to sell the vehicle for closer to $16,000. The next question is, “What can Mr. Consumer sell that vehicle for if he were selling it privately?” Let’s say he could get $15,500.00 which would be $2,500.00 more than what the trade-in value is from the dealer. For $2,500.00 more from a private sale, I’d have to say that falls into the “No Brainer” category. But, is the net difference really $2,500.00? There are basically 5 reasons why the differential is probably closer than you think. Lets break it down…

“Get The Vehicle In Tip Top Condition”

First of all, to get top dollar retail for selling the vehicle privately, the vehicle must be in near perfect condition. When a dealer takes that vehicle in on trade, they are going to recondition the vehicle so that by the time they are done with that process, the vehicle looks brand spanking new. Their average investment in reconditioning cost is about $500.00-$700.00. If the vehicle needs tires, they will put a new set of tires on the car. If it has minor dings in the door panels they can have those taken out without painting the car. Long story short, if you’re going to sell your vehicle privately and get top dollar retail, it needs to be in near perfect condition. In other words you’re going to put some money in the car to get it to that point. If nothing else, you’d probably have to spend a few hundred dollars to have the vehicle professionally detailed.

“Advertising The Vehicle For Sale”

In order to sell your vehicle privately, you’ll have to place a ad to find someone that will be interested in making a purchase. How much will that cost you? Not a whole lot, but placing a ad brings with it additional issues. First of all, you pretty much have to turn into a salesperson to sell your vehicle. You have to answer phone calls and emails. Then you have to set appointments for people to come look at you car. Just like in a dealership, when people set appointments to come in and look at a vehicle, they don’t all show up. So you’d have to deal with “no-shows” as well. Time is money so you’d have to factor in a monetary amount for your time of setting appointments and showing the car.

The other factor that comes into play is who’s coming over to your home to look at your vehicle? Are the people that are coming over to look at your vehicle really interested in the vehicle or do they have ulterior motives? Your home and family is priceless; enough said there.

“Depreciation” 

Your used vehicle will never be worth more than it is today hence used vehicles drop in value on a daily basis. If your vehicle is close to passing a threshold (i.e., going from 49,000 to 50,000 miles) in terms of mileage, the value of the vehicle could drop by several hundred (or even a thousand) dollars. It could take up to 90 days to sell the vehicle, and there are no guarantees that it will even sell.

“Tax Savings”

The biggest savings of trading your vehicle into you local friendly neighborhood car dealer could be the potential tax savings. When you trade your vehicle, you’re only taxed on the trade difference (in most states). So in other words, let’s say you’re looking at making a purchase on a $25,000.00 vehicle. Assuming a tax rate of 7%, your taxes on a $25,000.00 vehicle would be $1,750.00. Using the 2009 Honda Accord LX, and a $13,000.00 trade value, the taxable amount would only be $12,000.00 ($25,000.00 minus the trade of $13,000.00 equals $12,000.00). Taxes on $12,000.00 at 7% would only be $840 or a net savings of $910.00.

“Leverage For Making The Deal”

You could use your trade-in as leverage of making a deal a deal. If you make the purchase without the trade, the only negotiating power you have is on the new or used vehicle. Factoring the trade into the equation gives you the potential to make a better deal especially if you have a nice trade that the dealer would want on their lot. You can leverage your trade to get a better overall deal.

“Conclusion”

It makes more sense to trade your vehicle in almost all cases. You could net out more by selling it yourself, but there are no guarantees. You could miss out on a better deal. How much could that cost you? You’ll miss out on the tax savings. How much will that cost you? You have to place ads and pay for getting your vehicle in tip top condition. How much is that worth? No worries about depreciation; another savings.

If you sell a product or service, closing more sales equates to making more money which opens the door to myriad opportunities both good and bad. The good is the additional income allows you with more money to buy the things you need and want. Maybe it’s an avenue for that special trip you’ve dreamed about. Maybe it’s a car you’ve had your eye on, or perhaps it’s a way to start an IRA. The bad is more income equates for more opportunities to go in debt by over extending yourself financially. However that’s a whole other topic so let’s assume that you’re a good money manager, but your primary goal is to make more money by increasing your closing percentage.

When it comes to closing sales there are bestselling authors that have written thousands of books on “How to close the sale” by mastering several of the closes that they teach in their books and tape programs. Anybody heard of the Ben Franklin Close? How about the “Reduce to Ridiculous” close? Or the “Cost vs. Price” close? Those are 3 that come to mind, but there are hundreds more I could list. The next question is…do they work? My answer…in a word *YES! Notice the asterisk before “yes.” They will work if you know them and you can effectively execute them in a confident compelling manor. The only way to do that is to learn them backwards and forewords, and then practice them until you know them like the back of your hand. Nothing wrong with that except it involves that four letter word that most people don’t like…Work. Most people don’t want to work as taking the path of least resistance seems like the “The Road Most Traveled.”

So with all that being the case, what’s the path of least resistance that will pay the biggest dividend in terms of attaining a higher closing ratio? Or to put it another way, what can you do that won’t take hours to learn and you won’t have to memorize in order to execute? In a word, “Rapport.” Rapport and the ability to create a high level of rapport will close more deals than any close you’ll learn in any sales closing book. Why is this true, and how do I know this is a fact? Let’s say that you have a closing ratio of 20% meaning that for every 10 prospects you speak with you close 2 deals. In the automobile business that’s pretty much “spot on.” If you’re really good maybe you can up that to 3 out of 10, but from people walking in the door that you meet for the first time 20-25% is about average.

Now let me ask you this…If everybody that you got in front of to sell your product or service was a friend, relative, or a neighbor what do you think your closing ratio would be? Ever heard of the 80/20 rule? Suffice to say, those people would probably close at a much higher rate; 80% certainly wouldn’t be out of the ordinary. So now the rhetorical question is why? Why, because they like you and trust you AKA as already having a high level of rapport.

A friend, relative, or a neighbor won’t put up much resistance when it comes to price for instance. If they come up with a price objection and all you should have to say is something like, “Hey Man, I’m gonna take care of you. You know that.”  Assuming that you have a high level of rapport that should be all you have to say. What close would that fall under? Just remember this when it comes to closing. “The more objections you get from your customers, the more stalls you’re getting from your customers, and the more hoops your customers are making you jump through simply means the less trust you’ve built with your customer.” Trust and rapport go hand in hand, and you can’t have one without the other.

The best salesperson I’ve ever worked with had about an 80% closing ratio on first time customers. How did he do it? Why was he so good? In a word…Rapport. He was the best at building rapport with his customers. He was able to build such a high level of rapport that people wanted to buy from him. People would go out of their way to buy from him. In a short period of time his customers perceived him as a close friend, neighbor or relative.

So if you want to close more sales, you don’t have to learn more closes.  Build a higher level of rapport with your customers, and your closing ratio will rise in direct proportion. So now the question is how do you build that exceptional level of rapport to the point your customers will perceive you as a friend, relative, or neighbor? Stay tuned…

“Gap Insurance Doesn’t Cover Breakdowns”

Gap Insurance is sometimes often confused with extended service coverage. In other words, some people think that if they have Gap Insurance and their vehicle breaks down then the breakdown will be covered by the Gap Insurance; that is totally erroneous. Why? Because Gap Insurance doesn’t cover break downs, it covers the “Gap” between the loan amount and the actual cash value amount of a vehicle.

Let me give you an example of how Gap Insurance works: Let’s say that you’re trading your three year old car in for that brand new sparkling model that you’ve had your eyes on for the last several months. The loan amount on your trade-in is $12,000, but the car dealer gave you a trade-in amount of only $8,000 meaning you had $4,000 in negative equity.

This scenario is quite common when you trade a vehicle in that has a balance, and since you did comparison shopping you know that this was the best deal you could get. The new vehicle that you are buying has a MSRP of $23,990, but you negotiated a deal at invoice (you’re such a good negotiator) which was $21,600. Once you add your tax, title and any fees, your total balance to finance is about $27,000.

“But The Accident Wasn’t Even Your Fault”

Let’s say that six months down the road when you’ve only made 5 or 6 payments you get in an accident. You’re fine, but the vehicle is “totaled.” Your insurance company states that the replacement value of your vehicle is $16,000. Let’s say that your loan balance is now down to $26,000 which means you have a “Gap” of $10,000 between the insurance company’s replacement value and the current loan balance on the vehicle.

When you took the loan out on the new vehicle, you promised to pay (the contract you signed has “promise to pay” in the verbiage) the bank back in full. They said that upon full payment they would then send you the title to the vehicle, and release you from the lien.

“Now That My Car Is Totaled, I Guess That Means My Loan Is Satisfied…”
Not!!

Just because your vehicle was totaled doesn’t mean that your obligation to the bank is now terminated. The bad news is, you still owe the bank the balance of the loan and have a vehicle that you can’t even drive anymore. Not the kind of scenario you want, but many will face.

“Good News…Your Insurance Company Just Settled Your Loss…Bad News, It’s $10,000 Less Than The Loan Balance Payoff On Your Loan”

Your insurance company cuts you a check for the replacement value of the vehicle for $16,000, but in order to pay the bank off you need another $10,000. Where are you going to get $10,000? And how would you feel if you had to come up with $10,000 to pay a car loan off on a vehicle that you can no longer drive? Not a good situation for anyone to have to deal with.

“Your Gap Insurance Purchase Scenario”

Now let’s say we started this example from scratch with one difference: When you purchased the vehicle, you also purchased Gap Insurance. So now when the insurance company writes you a check for the $16,000, the Gap Insurance will pay the difference between the $16,000 insurance claim check, and the $26,000 loan balance. In other words, the Gap Insurance Company will write a check to your bank for $10,000 to pay your loan off.

When you financed the vehicle six months ago, the Gap Insurance might have been around $600, but that was assuming that you would have paid the whole loan off since it was part of your payments and included in the total amount financed to the bank. Since the vehicle was totaled only six months down the road, you actual cost for the Gap Insurance was next to nothing. Not to mention that it just saved you having to come out of pocket $10,000. That could have been the smartest investment you ever made.

Do Your Need Gap Insurance?

So now the question is, “Do you need Gap Insurance?” Gap Insurance is like any insurance. You’re covering yourself from a potential catastrophic financial loss. Why do people buy life insurance? If the bread winner were to die, that would cause a catastrophic financial loss to the family in terms of living. Health insurance is no different in that if you get sick enough, the hospital bills could cause you a catastrophic financial loss.

You have to look at Gap Insurance like any other insurance which is simply, “What’s the risk?” In the above example, without the Gap Insurance your potential out of pocket loss was $10,000 (or more). With the Gap Insurance your out of pocket loss is next to nothing. Why would someone take a risk like that when the out of pocket expense for the Gap Insurance is next to nothing versus having the potential to come out of pocket a substantial amount of money that they probably don’t have?

If in the above example you put a $10,000 down payment down when you bought the vehicle, you would have only had a loan balance of $16,000 at the time of the loss. That being the case, you wouldn’t have owed the bank a dime. So do you need Gap Insurance or not? It depends on your situation. Remember, most new vehicle depreciate at least $4,000 the day you drive it off the lot.

That means if you buy a new vehicle and don’t put any money down, you’re probably at least $6,000 “Upside Down” the day you drive it home. Gap Insurance would probably make a lot of sense in that case. It boils down to what’s the risk if the vehicle is deemed a total loss either by accident or theft.

Gap Insurance Guidelines: To Buy Or Not To Buy

To go by the rule of “Better to be safe than sorry” I’d try to stay around 70% LTV (Loan to Value) of amount financed at time of purchase. In other words if the loan value on a used vehicle is $10,000 or the invoice on the new vehicle is $20,000, you’d need to have a total amount financed on the used vehicle of $7,000. On the new you’d want to have an amount financed at time of delivery of about $14,000.

“Cash is King”

When it comes to trying to buy your next vehicle at a 70% LTV, the only way to accomplish that feat is to put a sizeable down payment into the deal. The problem with that is, most people don’t have a sizeable down payment to put down on their next vehicle purchase.

If you drive off the lot and have a sizeable “Gap” between what your loan balance is versus the actual value of the vehicle, and you don’t get the gap insurance, you’re taking the risk of having to come out of pocket a sizeable amount of money if your vehicle is deemed a total loss.

“Your Promise To The Bank…”

Remember, you still owe the bank the balance of the finance agreement in the event of a total loss situation on your vehicle. If the insurance companies paid claim is less than your loan balance payoff, you’re still responsible for the difference.

That in itself could be a potential way to ruin your credit as the bank will report the deficiency to the credit reporting agencies. If a outstanding loan balance deficiency  shows up on your credit report, then your credit score will take a major hit not to mention the fact that you will have an awful hard time getting another car loan if you can get one at all.

“Conclusion”

Follow the above guidelines on whether to get the Gap Insurance or not. If you’re not at 70% loan value on a used vehicle or Invoice on a new vehicle, then get the Gap Insurance. It could be the smartest insurance decision you’ve ever made.

“Become A Better Closer?”

As a sales trainer for a dealer group in Metro Atlanta, salespeople constantly ask me how to sell more cars. My answer isn’t the obvious of what many trainers might say which is learning to be a better closer. Sure being a better closer will help you sell more cars, but not the kind of numbers that will really affect your paycheck, and here’s why:

Let’s say for a 30 day period, a salesperson is able to get in front of 50 customers for the month. And let’s say their closing percentage is 20% which is about average for this industry. That represents 10 sales which is also about the average of what car salespeople sell in a month. At a $250-$300 average commission, that represents a $2,500-$3,000 paycheck at the end of the month.

The very best salespeople in this industry will have a closing ratio of 30-40%, but they are the exception to the rule. If you could raise your closing ratio by 10% that would add another 5 units to your monthly totals which is a significant increase, but at the same time not easy to achieve.

With that being the case, the best way to sell more cars is to see more people. Let’s say that a salesperson could get in front of 70 people for the month instead of 50. Without closing a higher percentage of opportunities, the salesperson would increase their output from 10 to 14 units.

“How To See More People”

So the question now is, “How does a salesperson see more people?” Quite frankly there are several ways, but maybe a better question is, “How can a salesperson see more people with the least amount of effort?” Let’s face it, salespeople work on commission. With that being the case, they could spend more time at the dealership to see more people i.e. they could work more hours. But that would take a considerable amount of effort, and more time away from home.

“Work Smarter, Not Harder”

The better answer is to work smarter not harder by working more hours. So what is working smarter? Working smarter in the realm of seeing more people would be to cultivate a database of prospects that will at some point be in the market to purchase a vehicle. This is where the “Numbers game” comes into play. Most salespeople only have a handful of prospects that they might be working with. In fact, for most salespeople only work the people that walk in the door each month.

What if a salesperson could cultivate a data base of 500 people that would eventually be in the market to purchase a new or used vehicle? Over a 12 month period that means that the salesperson would need to find about 42 people to plug into their database so that they could follow up with. That equates to about 2 new prospects a day.

“Where Can A Salesperson Find Two Prospects Per Day?”

There’s a word in the world of sales that makes salespeople cringe. It’s the “P” word and it’s called “Prospecting.” For many salespeople prospecting is what ends their sales career. Knocking on doors and “Cold Calling” is tough work, and a plethora of rejection. Most people don’t have skin that is thick enough to endure the constant bombardment of never ending “No’s” or “I’m not interested in your offer.”

When it comes to finding a good quality prospect for a car salesperson to find, they don’t have to look very far to find the best possible future prospect. They don’t have to knock on doors and they don’t have to cold call either. In fact, they don’t even have to leave the dealership, and they can do it while they are on their regular shift so they don’t have to work any additional hours.

“A Car Salesperson’s Gold Mind”

The best possible prospect for a car salesperson is someone that already likes and trusts the dealership. It’s someone that has done and or is doing business with the car dealership meaning that they have spent or are spending money with the dealership. Any idea who that person might be?

The service department in a car dealership is a “Gold Mind” for a car salesperson. Most the customers taking their car in for service bought the vehicle from the dealership. The ones that didn’t are having their vehicle serviced there probably because they like the service. That being the case, chances are those people are excellent prospects for future sales.

“Two A Day”

Being that each car dealership gets several service customers per day, a salesperson can easily find two service prospects per day. How you ask? They just need to go down there and start up a conversation while they have their vehicle in service. They aren’t looking to make a sale, although they will fall into a sale every now and then by hanging out in the service department. They just need to engage the service customer and offer them their own personal service which is something like, “If you have any questions, or if I can be of any service here’s my card. Feel free to call me. By the way, if we have a fire sale or some outrageous service special, how can I contact you?” Now keep in mind, this is after spending a few minutes building some rapport with the service customer.

“Let’s Do The Math”

If a salesperson hustles and works 24 days per month that would equate to 48 service prospects per month or 576 for the year. But let’s round it down to 500 due to vacations, sick time and maybe a little bad luck. Going into the second year, how many of those 500 prospects will come in to see about buying a new or used vehicle? Let’s say the salesperson could get 50 of those prospects to come in to see about buying a new or used vehicle.

Like in any selling situation, the closing ratio won’t be 100%, but it will be much higher than 20%. Let’s say for those prospects its 50% which equates to 25 sales. That’s two additional sales per month which means if the salesperson is doing average numbers of 10 sales per month, then now they’d have 12 deals per month.

“Year Three And Beyond”

If the salesperson consistently prospected the service department for 500 prospects for the following year, the number of potential customers the salesperson could expect to see will rise substantially due to the fact that more people will be in the market. If 240 of the 1500 service prospects (8%) came into look at a new or used vehicle, and the salesperson closed 50% that would be an additional 120 sales per year or 10 additional sales per month. That’s not to mention any additional referrals.

“Conclusion”

In order to sell more vehicles, one needs to have more opportunities; it’s a matter of “Numbers.” The more numbers that can be put in your “Database” or “Sales Funnel” the more people you can get in the door. The more people you can get in the door, the more selling opportunities you’ll have. The more selling opportunities you have the more vehicles you’ll sell. It’s a mathematical equation that works every time you play the game.