Make F&I A Star In Your Dealership

 

By – Myril Shaw, COO, Dealer Profit Services

F&I should be an equal, or, perhaps, a leading contributor to your Net Profit.  If it is not, then you can do better – even if it is, there may well be room to grow your F&I results.

Generally speaking, if your F&I Net Profit is not 3.5% to 4.0% of your unit sales, there is probably a process issue.  Rarely, it could be a people problem – but if the process is strong, consistent, and enforced, most people can make F&I a star.

The F&I success process starts far earlier than many think and it ends only after the customer no longer owns your unit.

F&I Profit and selling success begins when your customer first makes contact with you and your store.  Whether that is online, in print/TV/radio ads, or just driving past your location.  Every ad and every view needs to tell the story that you offer “Competitive Financing and the convenience of One Stop Shopping.”  There also need to be visible signs that you offer the Protective Products that add value to their purchase and help ensure that all they need to do is enjoy their lifestyle without worrying about damage or repairs.  Plant the seed – that is the first step.

The next step is to think about the messaging.  The Finance Office and the title F&I Manager have clearly been tarred by the auto industry.  In A car dealership, the Finance Office is where you are sent to be punished for having actually selected a vehicle.  So, the name is critical.  Don’t refer to F&I or a Finance Manager.  You should be introducing your Business Manager and the Business Office or Delivery Coordinator and Delivery Office.

Once your customer hits the store, make F&I welcoming and visible without calling it F&I.  Big, highly visible signs advertising “Competitive F&I” must be all around the store and lot.  There must be brochures and samples for your Protective Products everywhere – in your units, scattered around the walkways, and on signs.  Don’t be shy about what you offer – and why – “We care about your lifestyle.”

Once a customer engages in your store in any way, you must do a couple of things.  First, have the receptionist, or the salesperson capture their name, address, and phone number so that you can do a soft credit pull and determine their eligibility for financing.  Soft pulls can be run, and they have no impact on the credit score.  The customer never even needs to know that this was done unless you decide not to offer financing based on the results.  You will know that you can be aggressive on your F&I offerings with a strong result.

After your customer meets the salesperson, they should be introduced to the Business Manager – “Once you have picked the unit you love, you’ll be seeing Tom (Business Manager) to ensure that we have everything right and that your delivery is perfect.”  If possible, there should be face-to-face introduction – if that is not possible, every customer needs to know that they will visit the Business Manager to conclude the transaction.  This tees up the ability to meet even the Cash buyers (remember, only 15% or less of cash buyers are paying with liquid cash – meaning that they are borrowing on home-equity, drawing down savings, selling stocks or bonds, or using some other non-liquid cash – financing can help them conserve cash) and allows for potential conversions to finance and the sale of protective products.

Now your customer engages with the salesperson.  They explore the units and see the brochures and samples of protective products throughout the store.  They fall in love and now the Business Manager reengages.

“Fantastic,”, the salesperson says, “Let’s get you with Tom (Business Manager) so that we can be sure your experience is perfect.”

This part of the conversation happens 100% of the time.  Every customer, cash or finance goes to the Business Manager.  This was set up at the outset and it is followed through at the end.  100% Turnover is ALWAYS the rule.

Now the Business Manager takes over with this mantra in mind, “Aggressive and graceful in retreat – you never get more than you ask for first.”  What this means is that for finance customers maximum reserve and maximum Protective Product Profit is asked for initially – every time.  For Cash buyers there is always a request to convert to finance (“Gee, if plan to pay with cash you must have great credit – wouldn’t you like to at least explore your finance options and maybe conserve your cash?” – remember, only 15% of cash buyers are paying with liquid cash.). With cash buyers, the maximum potential Protective Product Profit.

Graceful in retreat means being able to talk back from the maximum without seeming like your customers were being over sold in the first place.  On Reserve that means, “Well, that was just lender return, let’s see what we can do.”  On Protective Products, there are many options for “graceful in retreat”.  Shortening the term of some protection may be a possibility.  Just dropping some coverage may be another.  Being creative is the critical factor.

So, now you have maximized profit – it is time to make sure that you have protected it.

How is your Compliance Program?  Do you have a Compliance Officer?  Do you have a full set of Compliance Manuals signed by the Compliance Officer and that your team is trained on?  Do you have a Compliance Training Program?  Do you regular, documented Compliance inspections?  With the newly invigorated CFPB (Consumer Financial Protection Bureau), claims regarding Compliance violations (identity fraud in particular) will be skyrocketing.

Follow these steps and you’ll make more and protect more.  Add profit to your dealership today.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services 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 the 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 on-line, 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 more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

 

 

Settling or Excelling – F&I Performance Can’t Be “Just Okay”

By – Myril Shaw, COO, Dealer Profit Services

Settling or Excelling – F&I Performance Can’t Be “Just Okay”

For way too long, F&I performance has been a kind of afterthought, a bonus, if you will.  Especially among Marine and RV dealers where the unit margins are so high, F&I has often been feared as potentially costing a deal rather than sought as a major Profit Center at the store – perhaps contributing 50% of the store’s Net Profit.

It is time for that to change.

F&I performance must shift from “Okay” to “Outstanding”.

Now, F&I is NOT just an F&I Manager and an office.  Driving F&I excellence is an ongoing, all encompassing, store wide effort with three major components:

- A comprehensive, defined process from the moment the customer hits your website till they leave with their new unit

- The tools and knowledge to maximize F&I Profit

- Complete F&I Compliance processes to help ensure that not only F&I profits, but also other store profits, are protected in the event of some type of Compliance issue

Let’s start with the storewide, end-to-end process.

- Advertise your F&I capabilities on your website – offer a “Get Pre-Qualified” option on each piece of inventory so that people believe that they can come in and buy

- Advertise F&I with signs in your store

- When a customer walks in, very early in the process, have the salesperson introduce them to the Business Manager/Finance Manager with the phrase, “Once you have the unit you have fallen in love with, you’ll be getting with Bob to ensure that everything works to deliver a delightful experience”

- Place Warranty and other Protective Product brochures and samples throughout the store so that customers are prepped to purchase these products

- Make it a rule, and enforce it, that 100% of customers meet your Business/Finance Manager 100% of the time whether Cash or Finance – and that has to happen at the time they make a decision, not when they come in for delivery, or just a couple of days before that

This complete process maximizes the opportunity for F&I success.

Once every customer has been prepped and every customer is being turned over to F&I, the F&I team must be equipped for success.

- The process for receiving and processing Credit Applications must be as automated as possible – applications should be electronic, the process for submitting to lenders should be easy and virtually automatic (AppOne)

- The people should trained and scripted

o Cash Buyers

         Obviously, you must have great credit, wouldn’t you at least like to explore your finance options?

         Let’s talk about ways to ensure your enjoyment and improve the future value of the unit, since you will be wanting to move up in 4 – 6 years, through these protective products

o Finance Buyers

         Aggressive and graceful in retreat – you never make more than what you ask for the first time – start with full reserve and maximize protective products and then walk back gracefully

         Objective is to maximize F&I profit on EVERY deal – not just get the unit out the door

Once the dealer is seeing at least 25% - 30% sales of protective product to Cash Buyers and F%I Profit of 7.5% or better on the amount financed, they have achieved the starting line.  It is time for continuous improvement after that.

Finally, it is up to everyone to ensure that F&I and, actually, all profit is protected.  Identity theft and other fraudulent transactions are at an all time high.  You may think that “you are on the lookout” or that “we just aren’t part of that” or that “that just won’t happen to us”.  Well, it could.  It could even if you are not involved because a Class Action Attorney could drag you in because of a dealer down the street.

The good news is that the CFPB (Consumer Finance Protection Bureau) has said that when there are violations or claims, they will absolutely look at “good-faith” efforts to to be in compliance and to be doing the right things.  They will potentially reduce or even eliminate penalties.  In local proceedings, the ability to demonstrate “good-faith” may well change any conversation.

So in that light, there are steps to follow:

- Ensure that Compliance is a process and not an event – not just a Red Flags Manual

- Have complete and up to date Compliance Manuals: Red Flags; Disposal; OFAC; Safeguards; Patriot Act

- Document staff training

- Inspect and record inspection of premises for compliance

- Document regular inspections of compliance

- Have all training and documentation available for updates on-demand

Once you have accomplished this you will see a transition from “mediocre” F&I results to a place where F&I is a substantial contributor to you Net Profit.

Just okay is not okay – it is time to excel in F&I.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services 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 the 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 on-line, 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 more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.