Think of Your Bottom Line When Choosing a Vendor

Think of Your Bottom Line When Choosing a Vendor

By Willie Grubaugh

Strong vendor relationships can put your dealership in a position of competitive advantage—through better products, superior service, or lower rates and prices. On the other hand, weak vendors can be a drag on your business—tarnishing your image, eroding customer loyalty, and draining dollars from your bottom line. So, I think we can agree that choosing a vendor is an important business decision, right?

Your head may agree, but your handshake says otherwise. I’ve seen it all too often as I call on dealers around the state. You’re choosing a vendor--whether it’s a software package, a service contract or GAP provider, a lender, a floor planner, or a GPS company, and you do it for the wrong reasons. I’ve heard them all... “The rep is married to my cousin,…We grew up in the same neighborhood,…He’s going through a tough time and needs my business,…We’ve always dealt with that company.”

Give me a break! None of these reasons has anything to do with a smart business decision. Instead, I recommend you consider a more common sense approach to choosing a vendor. The following are a few basic steps toward making an informed and smart decision:

1. Ask around for recommendations & referrals – Simply ask your peers. Talk to other dealers at association meetings and auctions. Pick up the phone and ask who they use currently. Ask them why. What did the company do to address that? Were they satisfied with the results? Have they had a bad experience with a company?
2. Do some research – Ask the sales rep if the company operates under any other names, has done so in the past, and if there is a parent company name. Get the correct spelling to make your Internet search easier. Also, visit the company’s own website and look around. Search online, using Google.com, Yahoo.com, or another search engine, looking for articles, achievements, customer opinions, complaints or testimonials, etc. Finally, call the company’s toll-free customer hotline (after the rep leaves) to see what kind of service you or your customers can expect to receive.
3. Pull a BBB report – Your customers turn to the Better Business Bureau for free reports on car dealers, now it’s your turn. Go to www.bbb.org and drill down to the information you want by following these steps:

·         www.bbb.org

·         Select “USA site”

·         Click on “Check Out A Business or Charity”

·         Under Business/Charity name, enter the business name, city and state if known. This will bring up all businesses with that name in that area. Choose the right one.

·         Select “View Report.” When this page comes up, you will see complaints filed, what was settled, satisfied, ignored, etc. No company is without a complaint somewhere. What to look for here is how the company responds to complaints. This page will also state if the company is an accredited member of the Better Business Bureau, and indicate a letter grade rating from A to F (A + being the best), or it will state the company is not rated.

4. Ask the vendor for referrals – Naturally, you can expect referrals given to you by the sales rep to have a favorable opinion of the company. But you should call them anyway—especially those you know personally. Also, ask the sales rep if the company has received any notable awards or recognition from industry associations you can track. Ask how long the company has been in business. Keep in mind, however, that while years in business is important, it’s not nearly as important as how long they are going to be around, how well they treat their customers, and how financially stable they are.

These are just a few steps you can take to run a “background check” on a vendor before you make the handshake. Take the time to do research now and save yourself headaches later. It will help you avoid pitfalls such as getting caught up into liking someone and not realizing the low quality of his or her product until it is too late. At that point, your dealership is negatively impacted, your customers are inconvenienced, your claim didn’t get paid, and the vendor isn’t answering the phone or is even out of business. Too late now!

You can’t expect a sales rep to disclose negative information about the company. He’s there to get your business. Of course, he’ll tell you how great the company is, what his people can do, how much money they will make/save for you, and so on. Don’t expect him to tell you where they fall short. You’ll have to either do your own research for that,  OR figure it out the hard way… and often at your expense. You need to do your homework and make smart business decisions when choosing a vendor. Think of your dealership’s bottom line before you sign on the dotted line.

Willie Grubaugh is Texas Regional Manager with Preferred Warranties, Inc. (www.warrantys.com) PWI brings the services of professional sales consultants to your dealership to help you increase F&I profits. Grubaugh can be reached at wgrubaugh@warrantys.com or call 469-835-4389.