Kenny Atcheson: Hello everyone this is Kenny Atcheson with Creative Profit Pros of CreativeProfitPros.com.
We have a special interview today. The person I am interviewing has over 20 years of experience in the automotive industry as Executive Vice President of Smart Choice Automotive Group. He grew the loan portfolio from $15 million to over $130 million. He is a respected educator, trainer, industry expert, author and national speaker. He is a lead and associate independent dealer Twenty Group executive conference moderator and he moderates groups whose members are involved in the buy-here pay-here industry. He currently moderates 11 national groups. Welcome Chuck Bonnano. Chuck is going to share insights with us today that should be very interesting. So Chuck, how are you today?
Chuck Bonnano: I am doing great, thank you.
Kenny: Oh good. Are you ready to get started and answer some questions and give real value to the listeners?
Chuck: Sure, I’d love too.
Kenny: Good okay. First question Chuck, what are missed opportunities, or the most common mistakes that you see dealers currently making?
Chuck: Well there are a couple of things. The first one is that they are not capturing their customers over and over again. Everybody seems to look at the buy-here pay-here business as a car sale one-time event business, but it really is relationship-driven in that we actually provide transportation for our consumers not for a three-year period but maybe for a 10, 20 or 30 year period. I think where dealers miss the boat is they look at it from a one transaction, one-time event — which is the way the retail world operates.
Kenny: So to fix that challenge, obviously you changed their mindset with some things that you might suggest; I would imagine one would be having a good CRM and to continue with developing those relationships rather than the one and done.
Chuck: Absolutely. This is truly relationship driven. I always tell people in the retail world that I know dealers love to say they are going to be with you throughout the life of your loan or your car ownership experience. But at the buy-here pay-here level, we really will be with that customer throughout the next three years or more. So instead of just becoming this collection type business where you have people on the phone pounding people to make payments, there’s great opportunity to interact with the customer, get them involved with your dealership.
Some of my best clients actually have parties every weekend for their customers with snacks and things for the kids each time they come in to make a payment. One of my dealers up in Montana does an annual party where he actually gives away cars of one of the customers on the books. It really becomes relationship-driven. So much of the marketing in the buy-here pay-here industry is based on repeat and referral business, so they would like to have an exceptional experience at the dealership for the customer not only the day they buy the car, but during the servicing loan for the next two to three years, as well as any services issue with the car. Then the customer becomes your marketing engine. They will become the people who will get you additional customers.
Kenny: Right. Gives away a car every year in Montana? Is that what you said?
Chuck: Yeah, isn’t that great?
Kenny: I love it. Certainly if you have the customer list and you have that relationship, and if the dealership has a big enough list, then right — that’s great. It would be hard to do if you were just starting and had 20 customers.
Chuck: You know Kenny, the thing that unfortunately the people would say is, “Hey Chuck, I just started off and I sold 20 cars in my first month, therefore I have got only 20 people in the books who have a little experience with me, so how will I use the market there?” Well my guess is to sell 20 cars you’re probably going to look at somewhere between 40 and 50 applications each, of which will have between six if you’re at the low end and 12 at the high end with personal references on there. So even from a 20 car operation it’s fair to say you may have a network or database of potential customers that will explode over 500 or 600 people in one month.
Kenny: Excellent point. Good, thanks for that.
Alright next question Chuck, I believe the best place to get creative ideas is in two places: one is completely outside of your own industry to just pay attention. You know look at other people their marketing, what they are doing and see how you can fit it into your own business and be a leader or a marketing leader. The other is of course something you know a lot about and that is in network groups. In groups where there are non-competing people in your industry, they’re willing to share ideas. Obviously, one of those places is the 20 Group.
So what I’d love to hear is if you can think of a good creative story or something that someone shared in 20 Group or another networking group but probably in the 20 Group that really helped the members. You know something that can maybe be off the wall. Anything come to mind?
Chuck: Well I can tell you, sure. One story is about a dealer and what the group was able to do for him who is a 20 unit per month dealer. They became involved in his business and got him to think outside of the proverbial box. He is a new car dealer, his father started the business so it’s second generation; they are experienced professional people. But he got himself so locked into what was marketing in this business. What was the right model? He was doing okay. He came from the 20 Group through peer pressure and got some really good ideas about how to do a better job in his entire business.
We watched him triple his net profit and he only sold 5 percent more cars. He just got better in every part of the business. It was a wonderful story to watch somebody go from a net profit of $400,000 to well over $1 million dollars without having to sell more cars.
Buy-here pay-here can be a little bit scary. You know you could just say “Yes” more often and get more volume, but you have to make sure you do it at the right amount of times to the right people and the right cars so that dividends will pay.
We have got to go way beyond just the retail environment. So the group gave him some great ideas and of course held him accountable in future meetings for implementing these ideas either through marketing, through sales process or collections. To me as a moderator to watch that occur over a few year period is a great thing to watch.
Kenny: Right. I love that you brought that up — it’s not about sales it’s about profits.
Chuck: Yes. When people want to be in one of our 20 Groups they call into this office and start talking about their business. I know how deeply embedded we are — car people — because everybody always describes their business by the number of cars they sell. The last 12 years of being a moderator, I have yet to have one or two dealers call me up and say, “My million dollar net profit a year business,” they will always say “We sell 30 cars a month.” Never a matter of did you make any money?
Kenny: We have seen that with big corporations rthat have gone down. They have tremendous members in the sales side but the profits weren’t so good so it’s not just what it’s about.
Chuck: Exactly.
Kenny: Is there any, I mean I know its behind closed doors you don’t need to mention any names or company any specific one thing that maybe a creative idea? And I have one that I can share and maybe you’ll know this story that came from another dealer. But do you have one that’s very specific, like somebody did advertising or marketing or auto tracking or something that they did specifically that really made a big difference?
Chuck: Well you know it’s really interesting that you say that. So many of my 20 Group clients are in 36 states right now and they go anywhere from the Bronx to different towns in Pennsylvania to places with populations of just over a thousand. So it’s curious that so many things that work or don’t work are based on geographic locations, the size of the market, putting our name on a pizza box. I have a $200,000 a month advertising budget and its mostly derived from television; but I think the thing that’s most exciting for me and watching car people in general — I hope they don’t get angry at me — but they’re slow to embrace technology. I’ve got some dealers who I don’t even know if they know how to use a computer. They certainly struggle with the internet and social media. But I see social media, electronic marketing, and CRMs, as tools that replace all of the ancient logs and books out there to make ourselves more efficient at what we already do. That’s what I am most excited about going forward.
Kenny: I am so happy right now that you have just said some of that with the internet and tools and social media. I have seen that a lot. I will certainly back you up on that, they are slow to embrace that and I’m trying to change that myself. It’s a business goal of mine, teaching them how to do that. But I hear that they struggle with the internet, they struggle with tools, but they really struggle with social media.
Just because it’s not working for you doesn’t mean it doesn’t work.Maybe they’re not doing it right. I do have clients that it is working for. We have exact numbers to prove it, but yet it’s difficult to get them past that. It’s great to hear someone like yourself say that as well, so I appreciate that.
Last question Chuck, what can people do or what should they do? How can dealers get the most out of their networking group, their mastermind group, their 20 Group? What should they do to prepare themselves to get the most out of them? What should they do on-going to make sure they make the most out of it?
Chuck: I think there are a couple of things that I watch successful dealers do as well as dealers who are doing marginal job. They’ll stay in business for a long time, they’ll slide through day-by-day, getting the same results over and over again. But the thing that happens is when you to a 20 Group and share ideas whether it’s the newest, greatest CRM product or somebody who is knocking them dead with their website or whatever it may be. The best of the best go home and take action.
You know it’s great to learn all these things, and most of these guys go to conferences and read magazines, but taking action is really the hardest part. I advice everybody that when you give something a try and it doesn’t work, before you throw it in the garbage make sure you get it right. Make sure you try all the angles. We’re still watching all our dealers blindly walk through how much should I put on the web, is the page important? Should everybody like me? What do I need to tell people? Is it going to be selling cars or just communicating? I mean they really don’t know all that stuff yet; but you can’t just quit.
Kenny: I agree with that. You mentioned taking action. I myself experienced that in my industry, primarily internet marketing. I’m with different groups that are basically the equivalent of a 20 Group for marketing consultants. I’m in three different groups and I invest a good deal of money into that.
I invest a significant amount of time and effort and money intothese and yet there are people who will be in the mastermind group who will hear some great ideas. And they’re excited. But I’ll talk to them three months later as a group again and they have done nothing. They are wealthy in the mind and can write books and give out great ideas, but they could not show you their numbers and their profits because they aren’t making any. It’s because of not taking any action. The common excuse you hear is that they don’t really know how to do that. Well, if you’re a dealer you might participate in your marketing, but you don’t do it all yourself. There are people for that.
Chuck: Absolutely.
Kenny:I think it was Henry Ford and — you might know this and you might help me on this one — Someone interviewed Henry Ford many, many years ago and asked him a question. He said, and “I don’t know.” And they said, “How could you not know that? You’re the leader of this company, you’re innovative.” Ford said, “I don’t have to know that. I have people who know that.” So the big excuse of “Well I don’t know how to do it,” is not a very good one. You don’t need too. There are people who do know.
Chuck Bonnano knows. So that’s great.
Well. we have a couple of minutes I’ll ask if you have heard of this one, I think it’s funny as well as beneficial: Many years ago, a gentleman that I know in buy-here pay-here was in a 20 Group. Prior to the meeting, this group was having a contest and whoever brought the best idea won a prize. This was actually started a month or two prior to the next 20 Group meeting.
This man created a fictitious company, and sent a bill to everybody in his 20 Group for printing costs for various types of print advertising. When when he got to the meeting, he revealed that’s what he did. He gave everybody their money back; he didn’t keep it. But something like 60 or 70 percent of them paid the bill. And there were no bills to pay. They sent him money because he sent them a bill.
He identified something that was going on. I know that has really nothing to do with marketing, but it just shows that there is hidden money where you could take that and add it to the bottom line. You can have more profits or you can find money in your dealership that you’re wasting and put it to use in something else — like ideas you get from your 20 Group, marketing ideas.
Have you heard that story or something similar?
Chuck: Well yes we did that actually, and we had those results. It created a lot of conversation about: Are you paying attention to all the money that is going out? And the one most critical is the marketing dollar. Besides payroll, in the buy-here pay-here business usually advertising is the next biggest expense. You’ve got to make sure it’s working for you.
You can market and make it work whether it’s TV ads or websites or social media, I don’t care which. I like technology personally, but I got to make sure that you’re spending money on things that work. I’ve got guys telling me things, like: I put in advertisement in the auto shop and I have been doing that for 27 years and I know that works. I ask how? And I always get this blank stares. They say: Well, ’cause I have been doing it forever. And I tell them that they don’t even have numbers to track where calls come from. Not only do you not know if calls coming in from one particular publication or media avenue, you don’t even know if they are turning those calls into deals. Listen: Let’s spend the money. Let’s spend it on things that work.
Kenny: Yeah tracking numbers, tracking links yeah. Tracking, tracking, tracking! With a first newsletter I send a welcome kit. One of the first things I bring up is tracking everything. Everything really. Find out a few different things like lead costs, cost to sale and get started on that. Start tracking everything because you need to know where it’s going and coming. For my own benefit, if I am doing marketing for someone, I want them to track things so they know how valuable the system is. If it wasn’t working I’d fire myself. But I also need them to know when it is working. I need them to know that.
Tracking is a big, big deal, so I’m glad you brought that out. Well Chuck I know you’ve got to get going, I know you’re one of the busiest people on earth and I think you fly around the country more than the President does. I’d like is give you the chance to share something, or at the very least tell us where people gain more information about what you’re doing and 20 Groups and such.
Chuck: Kenny we have talked a few times on recent conferences, and I think that everybody from the vendor side to the dealer side to the association side of the business, is that we’ve got to repeatedly take advantage of all the educational and networking opportunities that are there for us. I would hate to beat my own car guys, but sometimes I think because we’re in small businesses we feel like we’re on these little islands sometimes and nobody is like us. But what I found in my last 12 years is that there are about 15,000 little islands and everybody is about the same and could use each other to help sell.
Kenny: Alright. Agreed. So people want to learn more about what you’re doing Chuck, where should they go?
Chuck: We’ve got the dealer business magazine; online you can look for that or for anybody else interested in the 20 Group program, they can just call our toll-free number and ask for Diana or the 20 Group Caller Coordinator. If they want to go to National events or an event we have each and every year in Las Vegas, Sept 1 to April 16-18 I’ll be in Caesar’s Palace and we hope to see everyone there.
Kenny: That’s a great time of the year. That’s spring — that’s my birthday — it’s based all season but it’s a good time in Las Vegas and I will be there because I live in Las Vegas and it’s an easy drive for me so I’ll see you there. You’ll be there right? Will you be there Chuck?
Chuck: Of course I will, I will be chairing the event.
Kenny: Fantastic. I’ll see you there thanks a lot for everything Chuck, I appreciate it.
Chuck: You bet and we’ll talk soon.