'Tis The Season For A Jolly Review of Your F&I Profit! Is It Time To Change?

 

          By: Myril Shaw - Dealer Profit Services

 

Well, here we are, the heart of the slow season.  Thanksgiving along with Black Friday has now come and gone.

Things are slow.  It is time to evaluate and make decisions about how to be better.

This is the season for change – change to make you better.  This about change to make you jolly!

This is just one blog post.  We can't address everything here.  We can provide some guidance on your F&I performance.

Let's put some real numbers around this that will make it easy for you to adjust as they may fit your store or stores.

Let's say that you sell around $10M in Unit Sales per Year – and let's say that you finance 50% of those (which is less than you should be financing, but that is a different message.)

So, you are financing $5M per year.

Are you delivering at least $400K in F&I Gross Profit on this?  That means, are you seeing Reserve plus F&I Net Profit on Protective Products of at least $400K each year.  If you are not, you are missing a significant profit adder for your store.

Now, let's assume that you are seeing $400K in F&I Gross Profit – once you subtract your F&I salaries, your credit pulls, your storage and disposal costs, your floor space costs and your compliance costs (oh, not really thinking about Compliance – you should be – the costs there could be huge), are you seeing at least $320K F&I Net Profit?

Oh – you don't know – well, that is whole different issue.  F&I should be a significant individual and individually measured contributor to your bottom line.  If that is not the case, talk to your accountant or controller.  F&I profit matters and it matters as it's own profit center.

So, now that that you are looking at F&I as its own profit contributor, if $5M of financed deals per year is not adding $320K in net profit or 6.4%, you are underperforming.  

Time to change!

Here are the metrics you need to be seeking…and if you are missing them, you are losing profit and money:

• 8%+ F&I Profit on the Amount Financed

• 4.0%+ F&I Profit on Unit Sales

• 50%+ Contracts on Finance Applications

• 65%+ Protective Product Penetration on Contracts

Making this work for your store sales and numbers is easy – it is simple math – take your annual unit sales and divide by $10M then take that result and multiply it by our target results:

• $400K times your result is your target Gross F&I Profit

• $320K times your result is your target Net F&I Profit

The odds are that you are not there.  Look honestly at your numbers.

This is the season when change is as easy as it is ever going to be.

If the time to change your profit for the better is now – make the needed changes and DO IT!

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.  

 

Happy Thanksgiving – Really – It Is Really Special This Year – And There Are Lessons (F&I Profits Should Increase)

 

              By: Myril Shaw - Dealer Profit Services

 

      This has been an interesting year, to say the least.

      For many of us it has meant health challenges for ourselves and those close to us including our fellow        workers.  It has certainly impacted our friends in the dealerships that we work with. If it has, and you           are reading this now, giving thanks is appropriate.  

       For those of you who may have suffered personal loss in this challenging time, we offer our                         sympathy and our support and stand ready to help you in any way that we can.

       If you are among the lucky who have not had health related challenges, give a BIG thanks!

      No matter your personal circumstance, this is the time to give thanks simply for being able to read this        (not that this is special) and to engage in your business in a positive way after what has been a wild             year.

      For the Recreational Industry this year has been strange, unexpected, largely delightful and fully                unpredictable.  With a normal start and then the expectation of doom through to results we never                could have expected and now inventory shortages.

      What a year!

      So what have we learned?

      Digital retaiing really can work…and so can remote F&I.  We don't need to be face-to-face literally in        order to sell our products and to sell our Protective Products. Remote does not mean remiss – it                  simply means a new reality.  

       Has our world changed forever?

       Probably!  Not in the sense that we will never be face-to-face again but certainly in the fact that we             have learned to be much better digital and remote sellers.

       We have learned how to present our products online and digitally in a compelling way.  We have                 learned how to sell our Protective Products remotely (haven't we?)

       Selling Protective Products remotely takes a particular nuance.  It takes a skill that may not be natural         to all the in-store Finance Managers.  Certainly, these local Finance Managers have the product                   knowledge.  Certainly, they have the sales skills when looking at the customer.  It takes something             different when that customer is over the phone or on Zoom.

      Attaining maximum F&I profit is completely different in the days of COVID than it was in 2019 and          before.  It can be done…and fundamentally the rules have not changed.

      Virtual or physical, there must be 100% Turnover to your Business Manager.  In the virtual                           environment this is even more important  ensuring that you are meeting all the compliance standards           and requirements.  The Business Manager is THE person who can help the customer understand the          delight to be obtained through these Protective Products and the lifestyle protection that they ensure.

      In the Recreational industry these Protective Products are truly about protecting and enabling the                lifestyle.  They are far too important to be missed.  Face-to-face od remote, they are critical for the              enjoyment of the buyers.  They MUST be delivered.

      If you have not seen a major increase in your F&I profit this year then you definitely need to explore          what is wrong.  It is important that you do this right now because 2021 will almost certainly face the          same remote challenges without the pandemic bump in sales and the inventory challenges will                    remain an issue.

      F&I profit will, or should be, a major contributor and help your bottom line in a significant way in              2021 – will it be?

       It has been a year for which there has been much to give thanks and for which there has been much to         grieve.  Lessons learned…lets make 2021 an absolute year of awesome notwithstanding any of the             circumstances.

       Happy, Happy, Happy Thanksgiving!

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. 

Compliance Is Not Just A Thing

 

                By: Myril Shaw - Dealer Profit Services

Compliance is boring.  Compliance is a pain in the neck (or other body parts.)  Compliance is never an issue for me.  Compliance is just something people talk about.

All of those are true…until…a violation happens to you!

It couldn't happen – you say.  I know my customers.  We check everything.  We protect people's information.

Easy sentences…do you know if they are actually true?  Are you ready for the consequences if they aren't?

There are several areas where you could be or could suddenly become in violation of compliance rules and regulations:

• Are you adequately confirming and protecting personal, private information?

      o Are there Deal Jackets with Credit Apps laying around unprotected?

      o Are you confirming the identity of the people you are dealing with?

• What about cash?

      o Are you carefully watching cash transactions?

      o Are you reporting cash transactions over $10,000 and are you checking on the buyers for cash transactions below that level?

There are some key steps you can take to avoid the following penalties:

• Red Flags (related to Identity Theft)

      o Up to $3,500 per violation in civil fines

      o Up to $2,500 per infraction to the FTC

• Disposal (related to Identity Theft)

      o Up to $2,500 per independent violation

• OFAC (sales to prohibited entities or individuals)

      o Criminal penalties of up to $1,000,000 per violation and/or up to 20 years in jail

      o Civil penalties up to $55,000 per violation

• Safeguard (related to Identity Theft)

      o Penalties up to $42,530 per violation

• Patriot Act (related to money laundering)

      o Penalties not specified however, any violation will also be covered by one or more of the above

If you don't want these, then do the following:

• Appoint A Compliance Officer

      o Your Compliance Officer will understand, train on and enforce your documented compliance polices.

• Documents Your Policies

      o These are the policies that everyone is trained on; that your Compliance Officers enforces and makes sure that all employees commit to; that protect you from compliance violations

• Train Your Employees

      o Make sure they understand the rules

      o Don't leave Deal Jackets or other personal, private information laying around

      o Why something feels odd, check on it

• Protect Private Data

      o Cross shred what you don't need

      o Lock up what you do need

      o Private and personal needs to remain private and personal

Compliance is not really a mystery.  It is not legal mumbo-jumbo.  It is common sense and it is what you would want for yourself.  Take the time to make sure you are doing it right in your store.  

Doing compliance right protects your customers – it protects you – it ensures satisfaction everywhere.

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. 

Protective Products Protect More – They Protect Your Profits

 

 By: Myril Shaw - Dealer Profit Services

To some, perhaps many, selling extended warranties and other protective products seems more a burden than an opportunity.  The fear is that the process of trying to sell these products will "through sand in the gears" and potentially cost a sale – so the focus shifts to selling the unit rather than driving F&I Success through the enhanced profit provided by these protective profits. 

 

The recreational world is different than the automotive world.  In the auto world, the only real profit on a sale is driven, not through the profit on a unit, but through the profit provided by warranties and other protective products.  The pressure on the customer to purchase is high and sales motivation is, in fact, "this is how we make money."

 In the recreational world, the conversation and the motivation is completely different.  People are not buying boats, RV's or even motorcycles because they have to have them.  They are buying into a lifestyle, a vision.  While these protective products do provide great profit, they also serve to truly protect the lifestyle vision that the customer has.

An engine failure on the lake results in a tow and a fix with the warranty.  Flat tire – no problem – who carries a trailer jack or an RV jack – the Tire and Wheel Protection gets help to the customer.  Rips, stains, tears, chalking, yellowing – all protected with interior/exterior protection.  All of this goes to preserve and protect the customer's desired lifestyle. 

 It is simply irresponsible NOT to offer the customer lifestyle protection.

 Once everyone in the store understands this, it is time to focus on the profit.

 Paul Sheldon, RVP for Protective Asset Protection, says, "10% of the people will always to these products, 10% of the people will never take these products, the other 80% are ready."

 Michelangelo said, "The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark."

 The target for in-house F&I Protective Product penetration should be at least 75%.  Why would any customer not want products designed to help them have no worries and simple lifestyle enjoyment?

A great, menu-sold bundle of an engine warranty, accessory warranty, interior/exterior protection and GAP gives the customer great peace of mind and should profit 5% profit on the amount sold. 

 Add this to the reserve and suddenly there is 10% - 12% F&I profit on the deal.

 Do this on a recurring basis – make it a habit – and suddenly your store is gaining 4.5%+ F&I on unit sales – and all because you are ensuring a customer's lifestyle enjoyment is uninterrupted, no matter what.

 Happy customers and high profits – does it get any better?

 

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.