Every dealership has its preferred type of customer. Some dealerships prefer to target prime customers while some specialize in the subprime segment. Many are starting to accommodate both. The subprime market is a growing piece of the Canadian auto sales pie. Can your dealership afford to miss out? We cover three things you can do to attract and convert subprime customers.
If you’re reading this, the chances are, your dealership is toying with the idea of expanding into the subprime market. Or, you already made the change and want to learn how to boost leads and sales in this market.
If you’re new to the subprime market, you should know that there are some key differences in marketing and selling to non-prime customers compared to prime.
Successfully attracting and selling to subprime customers requires a deeper understanding of a prospect’s financial history and how car loans can help them rebuild their financial standing.
Implementing effective strategies geared towards the subprime market can help a dealership excel at selling to this market segment.
This blog post covers three things your dealership can do to build a solid subprime foundation.
1. Secure The Right Inventory
Before you think about implementing strategies to attract non-prime customers, you need to ensure there’s an ample supply of vehicles to meet the demand of credit-challenged customers coming through your doors.
A healthy inventory of affordable new and used cars will make the car-buying experience easier and more enjoyable for both the customer and your team.
For example, a non-prime customer might stumble upon your dealership with their eye on a brand new truck that they spotted on your lot. However, rather than lose the sale when the customer gets declined for finance, it’s wise to have some other more affordable vehicles to offer. It may not be the brand new truck that your customer had their eye on, but a certified pre-owned or lower budget vehicle can be seen as the credit-building stepping stone to their dream vehicle.
Your ability to close a sale like in the scenario mentioned above will rely on your capacity as a financial consultant which we’ll cover more in part three.
2. Build Credit Expertise
Subprime car buyers are perceived as higher risk compared to prime buyers. A car dealer who specializes in the subprime market needs to wear two hats. They need to be a salesperson and a financial consultant.
Becoming an expert in the field of credit could win over the trust of potential subprime car buyers. It's vital that a car dealer help their credit-challenged customer to understand why they were declined in the past and how their car-buying journey can be seen as an opportunity to rebuild their credit score.
Educating your non-prime customers about the reasons for higher interest rates and how affordable vehicle financing can help build their credit score will help them see a path to the car of their dreams and a better credit rating.
It might be beneficial to recruit an in-house subprime finance manager at your dealership. Prime finance managers are responsible for maintaining a strong back-end, which means that sometimes subprime focus can be forgotten about. Without staff dedicated to your subprime department, deals will likely fall by the wayside, which means leads get lost.
If your car dealership is continually turning credit-challenged customers away, having an in-house expert who is trained in assessing these individuals and matching them with financing will give your dealership a leg-up on competitors.
3. Connect with Subprime Lenders
Creating a solid subprime infrastructure involves building strong relations with subprime lenders. Some of the biggest mistakes that a car dealership can make is relying solely on big-name banks for subprime financing. But there aren't a lot of big-name banks, and you might think your financing options are limited. Don’t worry, there are other trustworthy lenders you can depend on.
For best approvals, subprime deals should be shopped to at least 6-7 lenders. A good subprime finance manager will continuously seek new subprime lending institutions to secure interest rates and financing programs. The more lenders your dealership can connect with, the higher your chances will be of securing an approval.
Now It’s Time to Find the Customers...
With the right inventory, in-house expertise, and lenders in place, you’re ready to start attracting non-prime customers.
If you’re not doing it already, the internet is an effective marketing tool that your car dealership should leverage to expand its reach. According to Think with Google, 9 out of 10 car shoppers use the internet as a source of information while researching.
Many subprime customers will be looking for affordable cars using search engines like Google, and websites like Kijiji and Facebook Marketplace. Online advertising can localize marketing efforts to your surrounding areas and ensure your business gets noticed in the right places by the right people.
It’s essential that subprime customers are aware of your business and how it can help them. Because of higher interest rates that many subprime customers face, they may be reluctant to trust businesses that specialize in subprime.
That’s where word-of-mouth marketing can help. WOM marketing will promote your business and provide social proof of the benefits you offer. Genuine reviews and testimonials posted online are powerful ways to build trust.
Good reviews and testimonials will help build your online ratings. Ratings shape customer perceptions and can help you stand out in search results. Because of the assurance ratings provide, more people will click and convert. As a result, your website will rank higher.
Selling to subprime customers is easy with Canada Drives. We’re an auto finance company that is partnered with hundreds of car dealerships all across Canada. We specialize in helping dealerships thrive in the subprime market.
We’ll attract customers on your behalf, help you manage prospects, and provide all the support you need to close sales.
If you want your subprime revenue to soar, give Canada Drives a call today to learn how we can set you up to win!