F&I – The Process Drives The Success

          By: Myril Shaw - Dealer Profit Services

Having Simple, Measurable, Achievable, Reasonable and Time-Based goals is absolutely a requirement for driving F&I Success!  While unequivocally necessary, these goals are not sufficient.  

Achieving the goals is only possible when they are supported by a comprehensive and robust F&I process.

The F&I process starts long before the customer is introduced to the Finance Manager (or, as we suggest, the Delivery Coordinator.)

The F&I Process begins when your customer makes first contact with your dealership.  Whether that contact is a drive-by, a print ad, online, TV, radio or otherwise, that first contact must advertise that Competitive Financing is available at your store.  Yes – failure to make this abundantly clear from the outset leaves open the very real possibility that the first thing your customer will do is begin to shop financing.  Once they know that they can have the convenience of one-stop shopping, you have taken a big step in the F&I process.

The next step starts before your customer has taken a walk around of even a single unit, and is critical to ensuring an outstanding customer experience – and locking in your customer before they have even started.  With the use of simple, web-based "Get Pre-Qualified" application and the next step of allowing the customer to "Shop By Payment" – allowing a fantastic customer experience by ensuring that the customer is actually shopping for what they can and, with these solutions locking that customer into your store.

Starting the F&I Process by advertising Financing and then "hooking" the customer with a great experience, the F&I Process is well underway.

As the customer starts to look at inventory, on-line or in-store, continue to advertise your finance capabilities and always present your units in terms of payment and not price.  All you need to do is to use consistent and reasonable terms and rates to set the payment.  Salespeople should be trained to always talk about payments.

Protective products should be visible by brochures or examples.  It is not necessary for your sales team to try and sell these products.  If asked, they should stories about how other people have benefitted from the products.  For example, when asked about the Interior/Exterior Protection after seeing a fake cup of spilled coffee on the carpet in a unit, the story goes something like this.

"One of customers saved a lot of money, and maybe his marriage, when he hooked that vinal seat with a monster fish-hook.  It ripped the seat.  Because he had the protection, he got it repaired like new at no cost.  It was great for him."

When asked about prices on Protective Products, your team should be trained with a common response – "Sorry, I just don't have those rate sheets – I'll make sure that our Delivery Coordinator goes over all that with you."

This step in the process plants the seeds for a successful F&I experience.

The next step in the process is 100% Turn-Over.  100% of your customers see the Delivery Coordinator (Finance Manager) 100% of the time – no matter what.  No checks or cash on the sales floor.  "I'm paying cash" still sees the Delivery Coordinator.  This gives them the opportunity to convert cash buyers and to present all the relevant protective products 100% of the time (this is important not just for the profit potential but also to protect against potentially liability for presenting warranties and other products to some customers and not others.)

Once the customer is with the Delivery Coordinator, they must follow the key F&I principles: The Hypocratic Oath of F&I – First, do no harm – never lose a sale; Be Aggressive but Graceful in Retreat – You never get more than what you ask for the first time – when you hear the sharp intake of breath, learn to back don gracefully.

Always present the finance results in terms of payment.  "Congratulations, you have been approved for a payment of $288.00 per month for 180 months and that includes your engine warranty, Interior/Exterior protection and GAP."

When this process is followed every time with every customer, you'll begin achieving your F&I goals and targets and will be well on the road to F&I success!

 

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966. 

  

 

F&I Profit – Where Enough Is Enough and Too Much is Just Right!!! (How does an extra $300K per year sound?)

                   By: Myril Shaw - Dealer Profit Services

Of course, it would be generally correct to assume that it is impossible to have too much profit.  That being said, when it comes to F&I Profit as a percentage of unit sales, there are definitely factors that can limit F&I Profit.

Depending on the dealerships customer demographic, is the number of near-prime or non-prime customers is disproportionate, F&I Profit can definitely be affected.  Financing of non-prime and near-prime customers will carry lower reserves, often in the 2% - 3% range, versus prime customers where reserves can run in the 6% to 8% range.

A further impact coupled with the lower reserves are the higher interest rates, which make it more difficult to sell protective products.  If the units are lower price $30,000 or less, retail protective product sales will be capped in $4,500 to $6,000 range – limiting profit on those products  to something in the area of $1,000 - $2,000 or 3% - 4%...making it very hard to achieve the 8% profit target.

The flip side of the coin is high priced units, generally $100,000 dollars or more.  While carrying 6% reserve is fairly common, even just 2%  protective product profit will be $2,000 of profit, which could mean protective product retail prices of $5,000 - $6,000 – meaning a payment increase $50 - $60 per month – not necessarily an easy sale.

F&I Profit %           2%                                             8.5%                                           4%

                          Weak Credit                                 Prime---------------------------------->

                          Low Price (<$30K)                         $50K Average                         $125K+

What does all of this mean to you? 

If you sell predominantly lower end units, you may want to consider adding some mid-range line of products.  If you are getting disproportionately  weak credit customers, you may want to adjust your some of your marketing to attract a more balanced demographic.

On the other hand, if you are selling the high end, 4% profit on a $125K unit is still $5,000 – so maybe that is not too bad.

The other consideration in driving profit is your cost of F&I.  There is NO CIRCUMSTANCE where your "all-in" F&I cost (salaries, space, equipment, materials, bureau pulls, etc.) should ever exceed 25% of your profit (and it should be much closer to 20%). 

The target Net Profit for F&I as a percentage of unit sales is 4%.  If your cost is 25%, you will need to be averaging 5.33%.  If your cost is 20%, you will need to average 5%.

At a store financing $7.5M per year, these numbers will contribute $300,000 annually directly to your bottom line – what is you could raise your Net F&I Profit to 4.5%, your bottom line increase becomes $337,500 – now, what could you do with that?

Dealer Profit Services - Driving Profit Through Fun and Inspiration

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.