JACKSONVILLE – Family First Dealer Services LLC and BBVA Compass Bank announced the addition of Trade-In Protection to its approved list of optional products for sale through its’ Motor Vehicle Retail Installment Dealers.

Trade-In Protection is an optional product which provides a benefit of up to $5,000* towards a customers’ potential negative equity, when they return to the original selling dealer to trade-in and purchase another vehicle if they owe more than what their vehicle is worth.

“TIP is a home run for our dealers,” said Matt Morse of BBVA Compass Bank. “As we are expanding our indirect lending footprint, we were looking for something to offer our dealers that show we are interested in both their profitability today, and their long-term success. TIP helps get that job done.”

TIP combines the retention benefit of a lease – but applied towards a finance contract – as the benefit is redeemable only at the original selling dealership during the trade-in process.

The program is offered on new and used vehicles as an optional F&I program, a blanket program and a combination with benefit levels from $1,000 – $5,000.**

“Partnering with BBVA Compass is extremely exciting,” said Tony Wanderon, CEO of Family First Dealer Services.

“The ability for the dealers who do business with BBVA Compass to add Trade-In Protection to their loans shows the commitment that they have to them and their customers. We look forward to working with the dealers in the Compass market and to a long term partnership.”

*$5,000 max benefit on new vehicles / $3,500 max benefit on used vehicles
**Program and coverage may vary by dealer/state/lender. Please refer to the TIP Agreement for additional terms, conditions, limitations and exclusions.

The magazine has posted new video footage of the five F&Idol category winners running through their product pitches. The following videos were put together by the F&Idol contest’s sponsor, IAS. If you’d like to read our feature about each of the five winners, click here. Or if you’d like to read our profile on overall winner GP Anderson, click here.

OVERALL WINNER and Best GAP Presentation
GP Anderson, Thielen Motors

Best Theft Protection Presentation
Raymond Borg, Suburban Toyota

Best Service Contract Presentation
Chris Bonilla, Auburn Chevrolet

Best Tire & Wheel Presentation
Paul Vender Kamp, DeNooyer Chevrolet

Best Key Replacement Presentation
Jim Hesselgrave, Crown Honda

DEARBORN — Ford Motor Credit Company announced the launch of Lincoln Automotive Financial Services (LAFS), a new captive established to serve Lincoln customers. It will provide branded financing products provided by Ford Credit.

“Lincoln Automotive Financial Services is the dedicated financing brand that complements the experience provided by Lincoln vehicles and our Lincoln dealerships,” said Bernard Silverstone, president of marketing and sales at Ford Credit. “Current and future Lincoln financing customers will enjoy the same exceptional service, with unique Lincoln branding.”

All customer touch points — contracts, invoices and customer service support — are branded LAFS, according to the company. The brand also allows customers to manage their accounts online or from mobile devices, and research financing-related products and services on www.lincolnafs.com, reported F&I and Showroom magazine.

“With a strong Lincoln vehicle lineup, an exceptional dealership experience and competitive private-label financing, we expect to drive more sales and loyalty for Lincoln,” Silverstone said.

SAN RAMON – MediaTrac announced the launch of the BeBack Program, a vehicle sales inducement program designed to target potential buyers that might not have purchased a product on their most recent visit to the dealership, reported F&I and Showroom magazine.

The BeBack program aims to help drive lost sales opportunities back into auto dealerships by providing the buyer with an immediate, customer-centric, valuable reason to return to the store and make a purchase, according to the company.

“Our new BeBack program has been highly effective in the beta dealerships,” said Jeff Shenk, director of operations at MediaTrac. “In fact, one Toyota dealership sold 10 new Toyotas in the first 10 days on the program as a direct result of the BeBack card.”

The BeBack Program allows each dealership to select an incentive value, issue it in the form of a time-restricted, redeemable card and offer it to customers as a sales incentive to entice them to return within a specified period of time to make a purchase. The BeBack card resembles a gift card with the dealership’s brand displayed and can have a variety of different denominations. The dealership also chooses the discount value offered to each prospective buyer.

Following their initial visit to the dealership and the issue of a BeBack card, a series of communications are sent to prospects to entice them back into the dealership. The first of these communications is a quick email survey that seeks to determine why the customer did not make a purchase.

“Prospects decide where to buy in part based on the speed and quality of sales follow-up. Statistics prove that if you can get your prospects back to your store quickly, you will have a much better chance of closing the sale,” said Shenk. “We deliver the right communications at the right time to entice your customers to return. And whether it is sitting in your prospect’s wallet or purse — or even on their dresser at home — the BeBack card is a concrete reminder of the value of doing business with your dealership.”

NAPA — AUL Corp., a provider of service contracts for used vehicles, has partnered with OptionSoft Technologies, a provider of automotive software solutions. The goal of the partnership is to allow both companies to continue offering their dealer networks the most advanced electronic business solutions.

“Partnering with OptionSoft will provide our mutual clients nationwide a simplified suite of F&I electronic business solutions that will streamline their F&I process and positively affect their profitability. It will also allow for a seamless integration with AUL’s Web portal for a paperless e-rating and remittance procedure,” said Jimmy Atkinson, COO of AUL.

“OptionSoft is very pleased to be part of AUL’s national provider network,” said Ken Tomaro, president of OptionSoft. “AUL is a leader in the vehicle service contract industry and are widely recognized for their innovative products and outstanding customer service. OptionSoft shares in those same product innovation and customer service ideals.”

Both companies said they will continue to find ways to assist dealers in selling F&I products and increasing profits on a compliant, customer-friendly platform. OptionSoft menus are specifically designed to increase the speed and accuracy of all information for improved remittance while decreasing the time and resources typically associated with sales, F&I and service drive sales operations.

A candid discussion of pre-paid scheduled maintenance: should the product maintain the status quo for most dealers as an also-ran offering, or should it morph into a core product? What would a core product pre-paid maintenance program look like, and who would be the winners and the losers?

The statistical improbability of many F&I products paying a claim, it could be argued, is directly proportional to how difficult they are to sell and why penetrations are not higher (Let’s call these products Low Statistical Probability products or LSP’s). An example would be a theft product, where the consumer is buying insurance, just in case the unlikely event occurs and his vehicle is stolen. We’re betting on that statistical improbability as well, hoping that we get to earn the premium without ever paying a claim.

If one accepts the argument above, the premise of a product that has an almost certain probability of paying a claim should have a correspondingly higher sell rate and penetration rate (Let’s call these products High Statistical Probability products or HSP’s). Of course, there are huge amounts of variables to consider in this unfair comparison, like premium pricing versus risk. All things considered, however, should we not take a very close look at product(s) that the consumer is very likely to use in order to drive revenues and profit? Further, can we make the equation profitable enough for the parties (provider, agent, dealer, and consumer) to where the adoption rate exceeds the historically low penetration rates of LSP’s?

Pre-paid scheduled maintenance (PSM) certainly fits the definition of an HSP. The consumer will ostensibly redeem their “coupons” at specific intervals. I use “ostensibly” here because there are few dealers that realize the potential for earned premium that exists with PSM from customers that do not redeem their coupons. Rumors persist that the non-redemption of coupons could be as high as 60%. Those dealers that are enlightened will demand to participate as the product earns out. Allowing the dealer to participate, or even to completely own the participation component, may be the key to reinvigorating this product.

There are independent PSM providers administering dealer owned PSM programs right now that are gaining traction. If the independent administrators can make a profitable business model with a dealer owned PSM program, perhaps it is time for us to consider this model or risk losing hard-earned market share to them.

It appears that we are at a crossroads and have two choices. One would be to stay on track and accept mediocre PSM penetration rates as they are. The second and more progressive option would be to capitalize on the new PSM approach and design a program that makes a dealer even more loyal to us.

Perhaps it is time to take another look at the essential elements of a successful PSM program, one that performs at extraordinary levels and leaves all of the parties content with their roles.

Let’s start where the rubber meets the road, with the consumer in the finance office completing the purchase of a vehicle. Why aren’t more consumers buying PSM? The answer is simple: most dealers allow the finance managers to price themselves right out of the market. The typical consumer, when asked to pay $895 for three years of scheduled maintenance, simply adds up the cost of nine or ten oil changes and a half dozen tire rotations and says, “No thanks!”

However, if the goal of offering PSM from a dealer’s perspective is to, 1) make a small profit in F&I to keep penetrations high because, 2) the real reason the dealer wants all or most of his customers to buy PSM is for retention in fixed operations first, then to turn those customers into repeat buyers later, then the dealer is on the right track.

Statistics tell us that up to 83% of customers will repurchase if the dealer can keep them returning to the service department for regularly scheduled maintenance.

PSM should be priced in such a way that even if a customer breaks out a calculator and walks back into service and gets the dealer’s pricing for oil changes and tire rotations, the total represents at least an equal, if not less amount than we’re charging them for the PSM in the first place.

Some dealers successfully turn a one year PSM giveaway into an up-sell opportunity in finance. The savvy consumer decides to lock in non-inflationary pricing today, and finance it, to save money overall on something he knows he will have to purchase tomorrow. PSM penetrations well over 50% are possible with this type of program, executed properly.

Assuming the dealer participates in most, if not all, of the earned premium, the administrator essentially becomes the marketing arm for the dealer’s PSM owners. This can be done entirely by polling the dealer’s DMS and marketing through automated email software programs, similar to what is used today by fixed operations retention software providers.

For providers of vehicle service contracts, promoting the bundling of a PSM with a VSC should be a natural evolution. Bundling will increase penetrations of both products if the producers are properly trained and the bundled pricing makes sense to the consumer. Priced separately, the best results are achieved when the dealer limits the markup of PSM to around $100 and realizes the big gains by up-selling in the service drive and taking a loyal customer and selling them another vehicle.

Selling PSM should not be limited to the F&I office. Why not market the program in the service drive while the customer is reaching into their pocket to pay for maintenance anyway? Again, training the service advisors to sell the program, plus consistently offering it to every customer and pricing the PSM competitively will drive adoption rates.

Since profit margins of HSP’s are inversely proportional to the margins of LSP’s, there must be serious volume production for the program to make sense for the provider. High volume PSM production is reasonable to expect from a properly designed, executed, and priced program with a committed dealer. A bigger footprint in the dealership, greater control of the dealer’s portfolio of F&I products, and providing another product to the dealer with an inherently more holistic approach to income development (increasing revenue for both fixed ops and variable ops), could be a win-win for the entire supply chain. I invite your comments.