When the auto industry contracted two years ago, car guys aplenty came into motorcycle dealerships, which is not necessarily a bad thing. My hope is that these recruits are well-intentioned people, motorcycle enthusiasts.
For the most part, I believe that people who are working in the motorcycle business today are honest and well-meaning. To that end, this article is dedicated to a few practices that are certainly not the exclusive purview of the auto world, but are those with which we want to completely avoid.
Whenever we put together a program or a sales initiative, my strategic direction is to ethically and profitably sell motorcycles in a manner that positively differentiates the motorcycle purchase experience from that of negative auto experiences.
What does it mean to do something ethically? Well, above board, honestly, in a way that you can look at yourself in mirror and like what you see. I never wanted to be that salesperson who couldn’t go out to eat locally for fear that they might see their customers.
And we need to do things profitably. Any simpleton can give their motorcycles and accessories away). The old adage is true: When you sell on price, you’re not really selling. Do you really want to have a business that lives on the manufacturer’s holdback or some ill-conceived notion of making it up on volume?
If we want to continue to move forward in this business, we have to have the good deal mentality: the customer has to feel well taken care of, and we need to feel well compensated. If either of those sides is out of balance, the relationship doesn’t work.
We also need to keep in mind that we sell our motorcycles. Sell is a verb. It connotes action. I often relate my experience of being in a motorcycle dealership for several hours “drinking Cokes and telling jokes” when I finally asked the guys if we should call someone and the sales staff asked, “Call someone about what?” To which I replied, “I don’t know, maybe to come see these motorcycles we have for sale.” Stunned, the response was, “You mean call them?” Yep.
In my strategic direction, we try to do things in a manner that positively differentiates us from negative auto purchasing experiences.
I want you to know that the auto business does a lot that we here in the motorcycle industry can learn from. DMS systems, accountability, processes, marketing and advertising are all part of that mix. I’ve met all manner of auto industry professionals to which I would be proud to say I worked with.
Like anything else, unfortunately, there are a few bad seeds. Unfortunately, the general public’s perception of the car business is, how should we say, not the best.
So how can we make sure we positively differentiate ourselves from negative auto industry practices? By avoiding what I call the seven deadly sins. You’ll soon see how these sales practices should be avoided at all costs.
Bait and switch: If you’d like the specifics, go to the Federal Trade Commission’s website: www.FTC.gov. This tactic is described as “an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend to sell.” Its purpose is to switch customers from buying the advertised item in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. Check with your attorney to make sure your dealership’s advertising, sales and promotional plans avoid this practice.
Credit application charges: The first time I heard this, I almost fell over. Dealerships charging to take credit applications! This is sometimes done to dissuade some applicants from applying for credit, sometimes for a bit of revenue — regardless, you should avoid this at all costs.You should welcome the interest in your products and services — including your financing opportunities. You should cheerfully take credit applications from anyone who asks to do so. The legitimate completion of credit applications is a service you provide to facilitate selling your products and services.
Exorbitant document fees: Documentation fees are those fees paid to the dealer for the acquisition and execution of vehicle registration documents and the like. In many states, “doc” fees are capped. And of course when they are, you must follow your state’s guidelines. However, in some states there is no cap. In those states, I believe charging reasonable documentation fees is a fine practice. What’s reasonable? Well, that’s a subjective question. We purchased our motorcycle in Maryland, but live in Wisconsin, so we had to do the registration process ourselves. I would have easily paid $150 to $200 to have that taken care of for us.
We’ve seen some unreasonable doc fees being charged in the motorcycle business: $699, $799 and the winner so far was $1,099. These kinds of charges may be considered criminal by some state attorneys general. They may be able to make a case for “unjust enrichment,” so if you have questions, better ask your attorney now.
Falsifying down payments: Down payments for financing contracts are monies paid by the customer to the dealer and taken into consideration by the lender in the pricing of the loan (read buy rate). These monies are typically cash, check, credit card payment or positive equity on a trade.
Misrepresenting a trade value or inflating the selling price of the motorcycle in order to “make the numbers work” and represent a down payment when none exists is a dangerous practice. For one, it could constitute a violation of your lender agreement. And two, in almost every instance it constitutes bank fraud. And although it may feel like you’re doing your customer a favor, it usually comes back to bite you.
Often, when customers file for bankruptcy, their attorney will comb through their financial documents and ask if the documents accurately represent what happened, and down payment seems to be one of their favorites. And if they don’t, what can happen is the attorney suggests to the customer that they were the victim of predatory lending practices. As you might imagine, this is not a good place for you to be. Falsifying down payments is an illegal and negative business practice.
No permissible purpose: Reviewing customers’ credit history (pulling bureaus) or submitting credit applications without the customer’s consent. Customers should understand that you are running their credit, and they should have signed documentation acknowledging they are giving you permission to do so. Permissible purpose means in layman’s terms that the customer has expressed an interest in purchasing a vehicle from you, and they have given you permission to run their credit.
Fictionalizing credit applications: I had a person ask me once how to fill out a credit application. After talking about being complete and a few additional questions, he clarified his request. “No,” he elaborated, “there’s some way that you can figure out what the monthly payment is and then calculate what to put down for the customer’s income.” “Oh yes, I remember this technique,” I told him. “It’s called bank fraud.” Credit applications must, to the best of your ability, represent truthfully and accurately the customer’s information.
Dummy documents: If you would have asked me five years ago if we would ever see motorcycle dealerships creating dummy documents to fulfill lending stipulations, I would have said, “No way.” But a couple of years ago lenders started to receive dealer-created documents. Pay stubs, mock utility bills, you name it. This is an incredibly dangerous and illegal activity.
Although far from a comprehensive list, the above “seven deadly sins,” regardless of where they originated, have no place in your dealership. Business can be tough, but you have to keep in mind if your solution seems too easy to do, like some of the above, the results will be very tough to take.
It’s not easy to prospect, present and follow up the right way, but when you do, the results will be very easy to take.
An award-winning author, top-rated trainer and founder of Peak Dealership Performance, Mark Rodgers holds a master’s degree in adult education and the National Speakers Association Certified Speaking Professional designation — only 500 people in the world have this coveted recognition. Contact [email protected] to improve your performance.