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Ask the Automotive Industry Pros

From Carla in Defiance, Ohio:

What is an effective way to evaluate a prospective employee about how good he or she is with inbound calls?

Mike Haeg, director of automotive, Century Interactive: This is a terrific question because it indicates a dedication to phone excellence at your dealership. Bravo!

The first step is to understand and communicate your own standards for success on the phone. If you are like most dealerships, the single-most-important outcome of an inbound call is setting a firm appointment. Don’t be afraid to clarify that with the prospective employee in your interview process. Ask how they feel about the appointment as a metric for success and what their experience setting appointments in previous positions was like.

Next, have the prospective employee actually handle a mock phone-up placed by the sales manager. Make sure to give tough objections and questions that can be expected during a routine sales call. Note how the prospective employee greets the shopper, if they steer the conversation toward an appointment, if they offer two appointment times, and if they set a firm appointment.

Use your call-tracking technology to actually review the phone call with your prospective employee. This should be a normal training routine at the dealership anyway. Ask about their thoughts on the call, where they could have improved, and what they would have done different to better handle the opportunity.

But, isn’t this a lot of work? Maybe, but if you’re serious about improving phone performance and capitalizing on these expensive hot leads, then a little hard work will go a long way.

From Steve in Charlotte, N.C.:

We are thinking about creating an internal auction process within our dealership group, where after 45 days unsold a used car goes up for internal auction, presumably at less of a loss than if we went the external auction route another 15 to 45 days later. Do you have any thoughts about best practices in setting up an internal auction?

Dale Pollak, founder of vAuto: Internal auctions can be an effective means to clear dealership inventories of units that have run out of their retail potential. Before launching an auction, however, I would recommend examining your inventory management and pricing practices to determine if your team and you have done everything possible to retail the units before 45 days. You may find opportunities to sharpen your acquisition and pricing practices and reduce the number of cars that fail to sell, thereby minimizing the need for an auction.

Depending on your group’s size and the volume of internal auction vehicles, it may be worth exploring using an online platform that allows your managers to efficiently evaluate, bid for and purchase the vehicles. (I’ve also seen groups use a more physical process, with a walk-around and sealed bids. This approach, however, adds the burden of moving vehicles to a single location.)

It’s also important that your managers evaluate the internal auction vehicles the same as with any other wholesale opportunity – with a dispassionate, market data-informed view of whether the vehicle offers a good retail fit for their respective inventories. I would also advise a “one and done” rule that if the auction cars don’t sell to another store on the first run, then they get wholesaled quickly through more traditional channels. Likewise, if a store purchases an internal auction vehicle, that store should be held responsible for retailing it within the next 45 days.

Two final points:

1) Stores that fail to retail a unit initially should pay the price. That is, it’ll be your job to ensure that managers don’t use the auction to mask the mistakes of their peers.

2) Look for patterns among the internal auction cars. You may well discover insights that help you better align inventory to individual stores from Day One and retail a larger share of units within 45 days.

Tonya in Grand Rapids, Mich.

Should I make sure the statement I get from an outside advertising agency that indemnifies us against FTC fines for false or misleading advertising, also covers state advertising laws? For that matter, how well do these statements usually hold up in court if the agency wants to contest?

Jim Radogna, President of Dealer Compliance Consultants Inc.: Yes, it’s very important that you ensure that your ads are compliant both on the state and federal levels. The FTC Act gives a broad overview of advertising compliance, while state regulations tend to be more specific. For instance, state guidelines may proscribe minimum type size for disclosures, allowable exclusions from advertised selling prices or prohibitions on guaranteed trade values, to name a few examples.

That said, advertising agency indemnifications are likely of little or no value in court, because the primary responsibility for compliance lies with the dealership, not the vendor. According to state and federal laws, a dealer has the duty to investigate the accuracy of any statements made in advertising.

Keep in mind that if your dealership is cited for advertising violations, your advertising agency may indemnify you against monetary penalties, but you will still suffer the ensuing reputation damage. Worse yet, many regulatory actions include injunctions or consent judgments under which your advertising practices will be scrutinized for as long as 20 years. In that scenario, in addition to the inconvenience of having to submit regular reports to the regulatory agency, there’s a very real chance of future substantial penalties.

For instance, the FTC entered consent judgments with five dealers for advertising violations in 2012. Since then, two of the dealers were charged with violating the judgments, resulting in settlements of $360,000 and $80,000, respectively. There’s just no upside to having regulators breathing down your neck!

A best practice is to have your advertising reviewed by competent professionals before publication. You should never assume that advertising agencies or vendors know all the laws and regulations governing advertising compliance. This is particularly true of companies based in other states, such as Internet and direct mail providers.

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