Wake up, Buy Here, Pay Here people. It's a beautiful day. Go grab yourself another cup of Joe and say hello to Jim and Michelle Rhodes on the Buy Here, Pay Here morning show. Take it away, you two. Hey, friends. Welcome to the studio in North Ogden, Utah. Yes. Happy White Hat Wednesday. Or buy here, pay here listeners out there. Yeah. And you know, it's interesting. We've been like kind of watching the, the, the, like how many people have listened and all of that. And I'm, I'm kind of thinking as we get going with a lot of this white hat way topics that it's going to be, we've noticed some, a couple on LinkedIn when it's just, it's around customer experience and all of that, that there's people outside the industry that are, that are kind of, listening yeah they're paying attention well it's hard it's kind of hard to say when you look at our analytics because I think my mom is eighty percent of the viewers that is she's got all of her girlfriends that she gets together with her every wednesday for wine wednesday um probably listening and because they it is funny because when we go to visit them that it's like oh I saw your show Yeah, it is funny. We meet family members. You bump into family members and they're like, whatever. Yeah, well, I mean, that's what happens when you kind of put things out on Facebook and you've got family and friends and all of that. And they're bored. I mean, they live in Guymon and it's... Well, they do keep really busy. Don't be insulting Guymon. I'm not insulting Guymon, sorry. It's a much... slower pace of life. And they have internet there. They do. They do. Yeah. All good. Yeah. Shall we get into our thing? I think that's a great idea. yeah so I uh I want to revisit a topic and this this will be an ongoing conversation like this is um one of the big opportunities that we have in our our sector and it actually inspired me to start to collect some new information from our v-eight members because it's something I used to do in my early coaching days was to track this pretty religiously and did it in my own dealership. Some of the information about customer retention, that's our topic for today, is retaining customers. And I alluded to in the description something, and I paraphrased what I remember Ken Shilson saying, and the exact words were maybe a little different, but he basically said, in buy here, pay here, it's not what you sell, it's what you keep. Yeah. Right. So, so think about that in the context of what we're looking at here today. And I've got a couple of things teed up that we can play that will kind of speak to that in different ways from different industries even. Yeah. And that's, I think there's, there's, uh, That's a really powerful quote coming from someone who's in accounting. And so they're not, they're not, you know, love, Shilson's been around for a really long time. I'm not even sure if he's still active. He's mostly retired. I know that his, the firm is still very active in all of the things, but But to have someone who is a numbers person, that it's accounting, they do forensic accounting, all of that, when he can say something like that. Well, you look at the losses, you look at a profit and loss report. And what we're going to look at today is actually just counts, like numbers sold versus number charged off and what I call net sales. So I've got some numbers teed up to be able to share with folks. But before we get into all that, I've got a couple of little short videos. to roll that kind of speak to the thing for people that aren't in our sector and kind of have a, have a feel for it. Yeah. We can go roll that one. I can't roll it. So I can just add it to the screen. There you go. Oh, sorry. I know we can pull it down for a minute. Cause I got a little bit more explained. So when you think about the, the aspect of retention in our business, there is there's a lot of math here and we don't need to go too deep in any math today but it's more about this idea that you know we we sell a hundred cars and we charge off thirty or forty or fifty or whatever that is so you can look at these things different ways you can look at it on a static pool like how many stay on the books over the entire duration of their loan for today I'm not really thinking about that I'm just thinking about to grow our portfolio because I wrote an article years ago early consulting days I wrote an article about um climbing beyond the buy here pay your plateau because you'll see dealers kind of especially smaller markets grow to you know, three hundred accounts or whatever the number is. And then they just kind of stagnate there and stay in a kind of a plateau. And it really begs the question, I mean, if we could keep more of those customers, obviously you're going to reach saturation in smaller markets or what have you. But But really, the opportunity here, as you and I know, is around customer engagement, customer retention. And in my own research this morning, there's a ton of stuff out there on customer engagement. And mostly, a lot of what I was finding doesn't exactly relate to our industry. This is more like, you know, if you own a cookie store or whatever, just an upfront. then that's a different level of engagement, right? Customers pop in periodically and you hope you get them in your loyalty program or whatever. But in our business, we have more touch points than that. We interact with our customer, whether it's online, social media, we hope email, but there's opportunities for engagement. So I would say that this is part of what you're going to see White Hat Way continue to do is create solutions around engagement. engagement and maintaining the kind of relationship with a customer that's going to increase our chances of saving more accounts. So that's the thing that you and I have talked about before about it's, you know, you can move, move your volume or you can save a few accounts and either way it's, it's like, you know, it's effectively like, like if you save two accounts, but then selling is effectively, you know, two net sales or go ahead. Well, this is kind of the thing that separates. I mean, there's a lot of dealers out there that come from franchise or just independent, and it's about selling metal. It's about moving metal. It's about sales. And we've spoken frequently that sales is the easy part. Just say yes, approved. Just say yes, approved, done. But it's keeping the customer sticky and engaged is the challenge. And we see frequently that it's just like the whole, the game, the excitement, the excitement. the reward, the stars in a dealership are usually around sales. And it's like if we can start to engage our customers and our team members, our collectors to like, these are where the stars are. These are where the fun is. This is where we engage. It can be both. You need both. But the focus, because we see frequently dealers especially if they're coming out of franchise or independent, they see it as moving metal, but that's just like, that's the front door. And then they've got this whole house or this whole journey. That's the first step. They've got this whole thing that happens afterwards that's really where the richness is. It's keeping them sold as Ken says, it's keeping them on the books because you know that you create a sale, which means you create a gross profit, which means you probably owe income tax and maybe some sales tax. But if you don't keep them sold, then you know that this is the part that we, that's a long tail, right? With most of our dealers. And I think we probably see some numbers here today that, you know, we're running thirty six to forty eight or thirty six to forty months is kind of what we're seeing. The bulk of our dealers are landing in that range. And so I would say that. you know, when you think about that tale, it's, it's really, we want to keep the customer on the books. And I think to your point, if we can begin to celebrate a saved account, because to me, that's effectively a sale. It means, it means payments next month that weren't going to be there. And so it's, it's effectively a sale and it costs us a lot less than the sale that we produced in the showroom, you know, this week. So this is another thing that gets touched on in some of the material that I looked at. I would urge people to, look you can just go to go to youtube and search customer retention okay oh yeah and you'll find a ton of stuff oh yeah and if we can in our dealership celebrate because you know when we hit sales goals that's like a big celebration if we can celebrate at the same level sure saving a customer. It's like we, we were, we were able to, to accomplish X and keep people sticky that, that, that again, as I, I just, I really, I really wish that, uh, more dealerships would, would just focus a lot on the collections and the keeping people engaged side. So yeah, which is, So let me play this short video from Alex Hormozy. Those of you who follow the broadcast know that we share some content from Hormozy. He's an entrepreneur who's pretty active on social media because we follow him. He's somebody who got to start primarily in building gyms and creating memberships around gyms. and that sort of thing. And then he's also, um, has online courses, has real estate interests and those kinds of things. So he's somebody who's, um, who speaks very, you know, um, poignantly about this particular topic. So let me try to get this teed up in a way that can view it. Um, bear with me cause I'm not certain about how this is going to play. Um, let's make sure we get the audio as I play this. You're getting the full screen view now? Because I can't see both at the same time. If you ask small business owners, what do I need? They say, I need more leads. They all say that. Now, if everybody says they need the same thing, to me, that's a big light bulb that if they're all pursuing the same thing and none of them are growing, then they're probably looking for the wrong stuff. And if you've been stuck at the same level for a long period of time, listen to what I'm saying right now. You have to find out why people aren't buying again. You have to find out why people aren't referring their friends. And sometimes you're like, well, when I asked them, they don't tell me. It's like, sometimes you have to read between the lines and that's the hard part. But that's the work. Like that's the work. That's the opportunity. Okay. So I'm going to play it again. It loops. So I'm going to play it one more time. Just let everybody hear it. Because I think what he says here. That's really, really powerful. Yeah. It's so, so important. That most people aren't willing to do. They're always like, if you ask small business owners, what do I need? They say, I need more leads. They all say that. Now, if everybody says they need the same thing, to me, that's a big light bulb. That if they're all pursuing the same thing and none of them are growing, then they're probably looking for the wrong stuff. And if you've been stuck at the same level for a long period of time, listen to what I'm saying right now. You have to find out why people aren't buying again. You have to find out why people aren't referring their friends. And sometimes you're like, well, when I asked them, they don't tell me. It's like, sometimes you have to read between the lines and that's the hard part. But that's the work. Yeah, that's the work, he says. Yeah. And so how often when we're looking through success or whatever, and people are like, things are stagnant. And the first thing that dealers will say is, how do I get more leads? How do I get more leads? How do I get more leads? And, and I, you know, I, I, leads are great. Cause that's, you know, that's you do to, you want to be able to keep the, keep things, um, keep your portfolio at least where it was, unless your intent is to contract. Yeah. But if you're not growing, I love this. Yeah. He talks about, um, he doesn't use this phrasing, but he's really talking about repeat and referral business. Okay. So, so can we get our customers to repeat and buy again? Okay. So that's an important one. And if they're not, wouldn't we want to know why? Like, wouldn't we want to know, obviously in a case of a repo charge off, we understand why that relationship might not bring it right. But the others that pay off, first of all, you have to go look into how many customers are reaching payoff. And then of those, how many, why, why aren't they buying again? And then the other one would be the referral part, right? A lot of people lean pretty heavily on referrals. Well, that only really works if I have a good relationship. Like if you're the business, I'm probably only gonna refer to you if I feel good about you, I just continue to feel good about you, my business relationship with you continues to be solid, then I'll continue to refer people to you, right? So we have to continue to maintain that and we have to work to create that opportunity. So, you know, you, you hear, like he said, I ask, and then, you know, they, they don't give me anything that's any read between the lines. I think that one really powerful way of understanding that is surveying your customers that are the leads that don't purchase. And I know dealers are busy and, but. That's, you know, a survey monkey kind of thing. And you already have a contact. You already have either through Facebook or through WhatsApp or text or email. You have a way of... communicating with them after you've determined that this is not going to work. And so it's like sending them out. I know we survey all the time or not survey, but we ask for a review all the time on Google. It's like Google reviews. They are bread and butter. But if we could start to look at surveys the same way, they're not going to be front facing to incoming customers. But they are so powerful for helping you understand where you can improve. Yeah, absolutely. And it's back to the thing about you can't manage what you can't measure. So you got to first document, capture the stuff. So you're talking about on the lead side, the people who didn't buy. I'm thinking for today more about the customers who chose not to buy again, or they're not referring anybody. So, so these are the parts that we can also measure. And so what we'll start to do in a V eight environment, because I used to do this with clients years ago, and I said, I did it. My own dealership was, we would measure very precisely because we were, we were. That was sort of lifeblood for us because in my own dealership, we did a very short contract. Because we have a limited amount of funds. We bought a low ACV car. We did a short-term note. This is way back in the... Like when the world was black and white. You could get a car for... three thousand dollars yeah two thousand dollars yeah yeah no it's like we now obviously you can still buy those cars it's like I always tell people it's still easy to buy cheap cars it's just buy a cheap car that'll last for the length of a note is the tricky part is the hard part so I think um that's the part that I would say this is the part of the strategy then was to do short-term notes and treat the customer so well and support them in such a way that we would um we were pretty aggressive about getting the customer to buy again and when I say aggressive I mean we we put good reasons in front of them to trade into another car right yeah and so we made that an easy path for folks to do that so we actually used to measure that in a couple different ways you would have a repeat, we call a repeat or reclaimed customer. So, so that's different. A customer who paid off and left your portfolio and now you reclaimed them. They came back to do business again. So we actually had that, that measurement. And then we had what I called a rollover. And sometimes in some contexts that might be treated like a A lay down. I don't mean it like a lay down customer. What I mean by rollover is somebody who would buy again without ever paying off the first one. So we just rolled them out of one account and into another one. OK, so that's the phrasing I chose. So I would recommend that dealers get comfortable with measuring that and know like of the customers who are buying now, how many are new? Because we know we spent more to get those. Right. And we obviously need to look at our closing ratio on that part. And then we need to look at of the customers that are in the portfolio. You know, we're going to lose some to pay off. Yeah, we're going to lose some to charge off. And so obviously for today, we're obviously working all the time to try to limit charge offs. I think that's not anything new. We hope dealers want to do that. Obviously, you hear about some dealers who. they pull the trigger quickly because they want that car back in there. And so that's a whole different conversation. We've covered some of that and that'll come back around as a conversation again and again. But for today, we're simply saying. If you do the math, you would see that there's high value for you in keeping the customer that you already have. It costs you less to retain that customer and that happy customer is going to hopefully do business with you again as a rollover or repeat deal. And then they're going to refer friends and family. So what's the value of that? know in in that scenario so let me roll this other video let me find this get this teed up so we can um get it shared looks like I kind of have to do one at a time yeah I um I I I really really appreciate when we you know we talk we talk to different dealers and um those that have like tommy brandis for one those that have like generational generational generational and and just the stories behind that of you don't have to spend as much to just maintain and sometimes grow your portfolio when you have that level of satisfaction well and it's not only what you spend to get a new customer but how much better do you feel in the underwriting stage when you're dealing with a customer that you've known for years as opposed to somebody you just met off of the street. It's easy. You don't have to do a lot of the, like, check their references and make sure that they... As technology evolves, it seems that the customer who comes into our lead process and into our underwriting process, we know less and less about them. At least that's my observation generally across the industry is we're leaning on technology to feed us the social and date of birth and the score. And now we approve based on those... Well, it's indicators, but we don't know very much about, well, and it's, and people say, well, I know a lot. I know everything that matters, but do you? Yeah. I mean, it's, it's like, do you understand that Tommy with his, his, uh, his underwriting? It's like, I don't run all that stuff. I hear what's happening and put the pieces together. Are they winding up or are they winding down? And it requires you to understand a little bit about the customer to know that too, to get to know them. And to use some of the old terminology that was offered to me when I first got into the business just as a manager and I was in the training, they talked about this idea of just getting to know the customer in a way that you can make a judgment about whether they fit in your program. So think about that. So it's one thing that they fit in your program from an income credit score standpoint, but are there other elements to look at to determine whether or not they, they fit. We don't need to go into all those today, but I'm simply saying there's the, there's the cost of attracting that customer and assessing that situation of brand new. There's a lot of uncertainty. We have a lot less uncertainty when we're dealing with a repeat customer. So it costs us less and we have a better idea of the outcome. Right. And so it just makes sense on lots of levels. Let me play this video for the, let me pull it up. I'm pulling it up and then you can go ahead and, So the audio follows. If you were able to solve that puzzle of keeping your clients for a very long time, it is impossible to not get rich. It's impossible to not become wealthy. It's a superpower. If you were able to solve that puzzle of keeping your clients for a very long time, it is impossible to not get rich. It's impossible to not become wealthy. It's a superpower. I love that. Yeah, it's just it's it kind of drives home the point, I think, in a way that we can say that that's that that just kind of strikes the chord that we're looking for here in terms of what's. What do we want to do? Do we want to spend money to attract new customers or do we want to put some more effort into keeping the customers that we already have? And now if we can do that and we can still maintain our volume of sales, then we can, we can grow our portfolio. So we think again, we think we're going to grow our portfolio by selling more and creating more leads and whatever that's going to look like. And we just, we have an opportunity. And I think that when we start to recognize that and work a little harder to repeat those customers, And I think this is why I often say that our collections department is going to have more impact on repeat and referral business than our sales department. We also know people who bring kind of a sales approach to collections, meaning they're selling the customer on why they should make that payment. So now you can sort of take that approach. And I just would say that when we succeed there, and obviously the smaller the market, the more important this becomes, right? But I would argue it's true. every market, but the more important it becomes, the more critical it becomes to your success. And to this guy's point, it's like it's wealth building. It's like we have a chance. It's impossible to not be successful and grow wealthy if we can get better at retaining our customers. So let me also share some numbers from our... While you're pulling that up, I was, you know, part of this is... You know, how are you engaging with your customer through the process? It's not, you know, there's opportunities are just boundless, borderless, boundless of, you know, finding ways to engage with your customers. And I was looking at Meg and Ryan Jones. They are doing this like yard sale kind of thing with some of the older inventory and all of that. And that's this big thing that's promoted. And they're telling people, bring your yard sale stuff. Let's make this an event. I mean, people are, you know, they're setting up at the dealership, this big yard sale. I think it's happening this weekend. And I thought, how fun is that? I mean, just, you know, you're going to get, because how many people come to a yard sale? Yeah. I mean, that's, that's, people love going and doing, you know, yeah, yard sales. And so I thought that's, it's just, it's finding different ways to engage your community too, which is pretty cool. So that was just an idea of what, so I'm going to pull that up for you. Yeah. So this is, let me get back over here and see if I can make this a little easier to view on the screen. that in. So you got it on full screen now. So I'll, if I expand it much more, you won't be able to see all the columns, but this is actually one of our V eight groups. And this is a group of more established dealers. These are five hundred and two thousand accounts. And this is all I was able to show today. Kind of still drives home the point. The numbers would be bigger if I had been able to locate year to date numbers for twenty twenty four. These are just twenty twenty five. Correct. So and this is the March numbers are just coming in. So this is January and February, but it still just gives the point of let's look at this dealer's year to date numbers right here. This is on row two forty one. They're the sales volume. And for those who aren't seeing the screen, let me just kind of explain to you what's happening. So dealer number one. One hundred sixty three sales through the first two months of the year. Next dealer, one sixty eight, one thirty eight for dealer three or at least the third column. They're not numbered that way. But then the next one is fifty nine sales a year to date. Forty nine for the next one. One sixteen and two oh three. OK, so the average is about one hundred twenty eight. Yeah. For again, that's two months worth of sales. So you could say they're averaging about sixty four a month across the entire group. But some are obviously doing substantially better than others volume wise. Now, the other parts that I wanted to then see is let's look in the context of keeping them sold. Let's measure again against or measure against charge. So in that same time period, let's just pick a couple of dealers at the top here. Dealer number one, one hundred and sixty three sales again against seventy nine during that period of time. They charged off seventy nine. Seventy nine. So this is why I prefer to look at this way because instead of statically. Powerful. Yeah, because now you're looking at. So this is what I call net sales. You see that row two forty seven. This is net sales. This is just your your sales that you originated minus how many are charged off. Now that doesn't take into account, that doesn't mean we gained eighty-four accounts because it doesn't take into account payoffs and that's fine. All we're trying to do here is look at how many Did we really gain potentially in terms of our sales? We added one sixty three in new sales, but we lost seventy nine. So that dealer number one had a net sales for that period of eighty four, whereas the next dealer had one sixty eight for sales. Eighty three for charge offs had eighty five net sales. And I think you'll see us start to celebrate this number a lot in our V eight format. Yeah. So what you're saying is net sales. This is who stuck. This is, this is what, this is what it is that, that's, that has, that's still. I wouldn't say it that way. Well, not really because this is, this one, these are new. We don't know if they're going to stick or not. Right. So this is just, this is just right now in this window of time. We sold some, we lost some. We sold some, we lost some. I think it would be really, I'd love to see these for all of twenty twenty four because we know January, February, March are tax season. And so you're going to sell more. But do your charge offs also go down after that time or do they go up? Everybody's practice and policy can be different that way. But I think that's why it's important to look at it over a year to date. Yeah. Longer range number because. Some will charge off half of the year for tax reasons or whatever. But I think if you spread that out over a longer term, it still gives the same information. We just can't hide from these numbers. And I look at this and I go, so me, coming from a perspective of how are you doing in keeping customers sticky, is I would look at the... third column and the fifth column or third, fourth, sixth column. And it's like, so you are, you're keeping your percentages of charge offs down to twenty seven percent and then, you know, thirty percent. And then, you know, we see that there are some that are at eighty percent. yeah so let's look at that one the one on the far right for those people who aren't seeing it the the sales volume just in two months this is january and february sales volume was two oh three but the charge offs in that same period was one sixty six yeah so their charge off as a percentage of sales is the eighty one percent michelle just mentioned so that's That's where, and I know that particular dealership, they're kind of cleaning up a messy portfolio. They also have a little different strategy around that rollover scenario. And currently, they just choose to charge off when they do bring a customer out of one account into another one. They will charge off the old account. So those accounts are in accounts in total and not in dollars, too. So if they're doing that, the dollar amount may be really, really low. Yeah. It could be. If they're rolling over and doing that. We don't know the stage. And this is why we need to start to analyze this a little more closely because I do think it's high value for dealers to be able to look at this and say, across a period of time, sold a hundred cars, X amount of those were new, X amount of those were reclaimed customers, and X were... Yeah, that would be really great to see that. Yeah, we'll get there with VH. So I think this is part of what that completely changes how I look at that. Eighty one percent. Yeah, I mean, it really, really does, because that's like that's can be. Yeah, that can be an indicator of how many they're getting to come in. And it's true. But I would say we still have the same problem. It depends on how many of the two hundred and three that bought from that one dealer. What did we spend to get them in there to buy a car? And so it's our cost to replace the inventory. We spent some money to attract the customer. We spent some money to acquire that inventory. And now we would look at, you know, of these charge offs that happened. You know, what was the experience there? Because we're still not gaining accounts. You know, even though that's a strategy in their case, we're still not gaining accounts. We still have the same customer paying the same, you know, five hundred a month or whatever it is. So we swapped cars and we retained the customer. Yes. But what I'm really referring to today is trying to grow our portfolio by keeping the original customer. Right. And still selling a new customer. Right. We still pick up the new sales at the volume that we're going to enjoy. But then when we keep more on the back end, that's where this wealth building comes from that he's talking about and your portfolio growth and your cashflow growth and all these kinds of things, you know, start to really kick in. So that was the part that I really wanted to have a chance to introduce. And I think, you know, it feels like to me, you and I could continue this conversation because by the time we meet next week, we'll have a fair amount of data in from the month of March and we can pull together those year to date from last year. So we can just make a part two thread on this conversation because I do think that that's part of where Dealers can really benefit from getting the hang of this retention side of the business. And so, again, we'll continue to work on that and make sure that we do what we can to support that for dealers, make solutions available to help them maintain a relationship with a customer. And also to start surveying those customers who aren't buying. I think that's one thing that you can look for White Hat Way to do because I think a lot of customers are going to answer a survey from White Hat Way that might not answer from the dealer or whatever. Or we might get better information. Yeah. Well, and as we, because part of what we're doing with White Hat Way with White Hat Certified Dealers is doing marketing in their communities. Sure. That will lead people to the dealership, but it's about White Hat Way. So they would come in as as leads coming through the White Hat Way funnel. So we'll have access to be able to to to ask them those kind of questions. Yeah, no, for sure. And I would say folks want to let me put my email up here. If folks want to see the year to date because people get busy, might not be able to catch next week's episode. If they want to see the net sales numbers from V.A. for last year. then just send me a quick email and just put in the subject line, net sales, and I'll get you the results that we're pulling together on that kind of comparison. Absolutely. Also, just... That's right. He's joining us on Friday. Director of Education. Director of Education. For NIADA. Yes. So we'll look for him on Friday. Yeah, absolutely. And so we always are excited that when he comes, because he's just such a wealth of information and such a great teacher. Of all things, buy here, pay here. Absolutely. He really, really understands it. Yep. All right, everybody. Thanks so much for joining. We know you have a choice. Thanks for taking the time to listen. And also, you know, if you've got any ideas about what you would like to see us talk about, feel free. Jim at White Hat Way to say topics in the subject. Yeah, absolutely. All right, everybody. We will see you on Friday. Ben, Brent, Mike, Carmichael. And I hope you guys have a great rest of your day. Thanks again so much.
