By Myril Shaw, Chief Operating Officer, Dealer Profit Services
F&I Profit in 2023 may make all the difference to your store’s financial success for this year. Maximizing F&I Profit does not happen by accident – or by magic. There is an absolute science and process to ensuring maximum profit.
The process begins before you know who your customer is. You may not know them – they know you. Whether that knowledge comes from your website, some form of advertising, or just driving by the store, the customer knows you. This means that loud and consistent messaging about “Competitive Financing Available” must be everywhere – and then that messaging also has to be highly visible inside the store. The customer must believe that the store is a convenient and effective “on stop shop.” This helps keep customers from shopping F&I at local lenders/credit unions.
The customer needs to be introduced to the Business Manager as soon as they are physically present at the store. Whether the introduction is physical or virtual, the customer needs to know, “As soon as we find the unit that you are in love with, Sam/Sally will be sitting down with you to make sure that delivery experience is excellent too.” This ensures that Cash or Finance, the customer knows that they will be talking to a named Business Manager.
At the conclusion of the preliminary shopping process, 100% of customers talk to the Business Manager 100% of the time. The Business Manager makes an effort to convert Cash customers to Finance and then, 100% of the time, they present 100% of the relevant Protective Products, making every effort to maximize profit on both Reserve and Protective Products. They follow the two critical principles of F&I Profit.
1. The Hippocratic Oath of F&I – First, do no harm. F&I can never stand in the way of a unit sale.
2. Aggressive and Graceful in Retreat – “You never get more than what you ask for the first time.” The Business Manager MUST begin with the maximum realistic profit package and then know how to walk back without the customer feeling initially exploited.
Finally, there must be clearly articulated and expected results – and then no one can ever be satisfied. The initial targets are below. Once these are being met – increase them – always.
Are you achieving 5%+ F&I Gross Profit on unit sales (for units of $150,000 or less)?
Are you achieving 7.5%+ F&I Gross Profit on the amount financed (for units of $150,000 or less)?
Are you selling Protective Products on over 70% of finance deals and over 35% of cash deals?
Do your “all in” F&I costs, including fully loaded personnel costs, credit pulls, processing, space allocations, etc. fall below 25% of your Gross F&I profits?
If your (honest, fully analyzed) answers to any of these questions, you are leaving money, and perhaps a consequential amount of money, on the table.
Your F&I Net Profit should be contributing over 40%, and sometimes over 60%, to your store’s overall Net Profit.
Never have these principles been more important than in today’s economic climate. F&I Profit becomes even more important as the number of buyers declines and the carrying costs on inventory increase. F&I Profit has, perhaps, never been more important.
Buying any recreational vehicle is a lifestyle decision. The buyers are excited. They want a personal experience with human interaction so that they can talk about and feel the excitement for the purchase. Customers are not aware of the value of the various Protective Products – one selected though, it is very difficult to change their mind. It is the personal conversation/interaction that facilitates the profit and builds loyal customers.
Following these practices will lead you to the best F&I profit.
If you are not exceeding the targets – we need to talk – we can help you make it happen!
We are here for you anytime at info@dealerprofit.com.
About Dealer Profit Services
As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services, a member of the Brunswick family, is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected. As a Service Provider, Dealer Profit Services provides complete F&I services and delivers industry-leading F&I Profit Results. As Trainers and Consultants, we help dealers improve their in-house F&I departments. Through the Comprehensive Compliance Program, Dealer Profit Services provides an online, on-demand, Compliance Program with documents, training, and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues. Learn how to use Dealer Profit Services F&I Delivery Services – Click here. Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.
