Make F&I The Largest Profit Center In Your Store By Making It Fun and Inspiration

  

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

Why even do or offer F&I?

Boating and RVing are lifestyle choices and are not living requirements.  Being out on the water or in the woods is Fun.  Finding that breathtaking view or having that stunning experience is Inspirational.  That is the lifestyle that customers are seeking.

What F&I in the store does is enable Fun and Inspiration for your customers.  While effective F&I is about profit for the store – it is about lifestyle enablement and protection for the customer.

When a customer needs or wants to finance to enter or maintain the number one issue is NOT the interest rate, it is about overall payment and getting into the unit.  There is absolutely no reason for F&I to be afraid of maximizing the interest rate in the first conversation in the interest of maximizing profit.  The F&I experts just need to know how to walk that rate back gracefully when the customer resists – some customers just like to negotiate, and others genuinely have a local lender with whom they have a relationship, and who is willing to offer a lower rate.

In any case, the two key principles of F&I always apply:

1)      The Hypocratic Oath of F&I – First, do no harm.  Never cost a sale.

2)      Aggressive and Graceful in retreat – Always start with the maximum package and know how to walk it back without insulting the customer.

The “interesting” thing about the interest rate is that it must be factored into the full package of both loan rate and protective product sales.  Protective products are also very important to lifestyle enablement and protection.  There may be times when it makes sense to adjust the rate down a little to sell a bigger/higher profit bundle of protective products.

Protective products are introduced and sold with stories, not features.  Of course, the features will be described.

Examples of those stories that sell are along the lines of the following:

“I had a customer a few months ago who got this engine warranty.  They broke down out on the lake.  Their tow was covered.  Their lift out was covered.  The repair was covered and they were back on the water in a week with only the $50 deductible out of pocket.  Needless to say, they were very happy.”

“There are some folks who purchased this pontoon and it has carpet.  Not long after they got it, they were having a party at their dock and someone spilled a glass of red wine on their caret and it left a stain.  Because they had taken the interior/exterior protection, the carpet was restored to new condition in just a matter of days.”

“The Trophy Fishing Accessory Package saved the day and the dollars for my customer when their depth finder stopped working.”

“It was scary.  These people had their boat parked at their dock, and fortunately, they were not on it.  Early in the evening, a drunk boater rammed their boat and sank it.  It was totaled.  Because they had purchased the GAP Waiver, the difference between what was owing on the loan and what the insurance company said the then declared value of the boat was fully covered.  Between the Insurance Coverage and the GAP payout, they were able to go right back to their dealer and get a new boat without being out of pocket.”

These are not “feature” stories, they are “lifestyle protection” stories.  These stories help make these products appear invaluable and allow for very strong protective product penetration with maximum profit.

F&I does not mean cost to the customer, it means that they can comfortably enter and sustain a truly Fun and Inspirational lifestyle.

As a positive aside, done right, these products should provide the dealer with 5%+ F&I Profit on unit sales with Protective Product penetration rates of 60%+ to over 80%.

F&I makes for good days for dealers and their customers.

Contact us today at info@dealerprofit.com.  We will help!

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.  

F&I Profit Comes From F&I Process - Train Your Team To Be The Best

 

By Myril Shaw, COO, Dealer Profit Services

Your F&I Net Profit should be contributing as much as 50% or more of your store’s net profit.  If that is not the case, your F&I Process needs tuning and your team needs training.  F&I success is not an art, it is a science and your team can learn the science.

F&I Profit starts with two key principles:

1. The Hypocratic Oath of F& I – First, do no harm.  Never cost the team/store a sale.  If it means $0 reserve and no Protective Products (or, at least, no Protective Product profit), ensure that unit ALWAYS gets out the door;
2.    Aggressive and Graceful in Retreat – You never get more than what you ask for the first time.  The initial conversation with the customer must include the maximum reserve and a full menu of Protective Products  with maximum profit – then you need to know how, when that sharp intake of breath is heard from the customer, to gracefully walk back the offer until the customer agrees.  Typically, that process starts with, “Well, that was just our first call, let me check and see what else we can get…”

3.      

The team needs to understand the lenders so that reserve can be maximized.  They need to understand the available protective products so that they can maximize profit and assemble effective and logical packages.  The one product that should be offered on every finance deal with a down payment of 20% or less is GAP Waiver.  It is an easy sales and can produce a great profit percentage.

Engine warranties are an important and effective profit driver – but the ability to sell them, but they be limited by the manufacturer warranty offered on the engine. 

Accessory warranties are generally good to offer. 

Interior/exterior protection is easy to tee up and once teed up is a fairly straightforward sales with great profit. 

Tire and wheel/tire and road hazard would always be the last element of a bundle if it is included at all.  There is not a lot of profit on either an absolute or relative basis. 

Once the team is versed on what to sell, when, and how, the next critical element is monitoring results and holding the team accountable for continuous improvement in all areas of F&I sales.  Targets should be set at 5% F&I profit on unit sales and 9%-10% F&I profit on the amount financed.  Protective products and even financing should be offered to ALL customers, including cash buyers (80% of cash buyers are not paying with liquid cash, so there is a chance to convert cash buyers to finance.) 

Once these targets are achieved, raise them…and repeat.

Practicing the science of F&I will make it a major profit center at your store.

 Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC, a member of the Brunswick family,  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.   

Training Makes The Difference – Get To 5% F&I Profit On Unit Sales

  

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

F&I Profit comes from training, not from instinct.  It is not natural and it does not come from simple conversations.

First, there has to be a clear target on F&I Profit.  It has to be 5% or more on unit sales.  If you have not set that target, it needs to change today.

In today’s market, with rising rates and decreasing consumers, this is a target that becomes increasingly challenging.  That said, it is still attainable and should be the goal.

First, you still have to maximize your reserve.  Rates will be higher, but so will the expectations of buyers.  Even more important, selling protective products at a good margin is critical.  This combination will drive your F&I Profit higher.

You must have the products to offer for protective products.  You must have the friendly aggression to drive the maximum reserve.

This is what will help your store maximize profit.

We can help you do that – either through training or by taking it over for you (which will be cheaper than in-house!)

Contact us today at info@dealerprofit.com.  We will help!

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. 

 

High Performance F&I Results Are Not Just Natural – They Are Trained

 

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

F&I Profit does not come naturally.

The natural F&I Profit is mediocre at best.  It is influenced by the sales team.  It is influenced by average performance by the F&I/Business Manager.  It is influenced by mediocre expectations.

If you are not looking for 5%+ F&I Profit per unit sales you are missing the mark.  If you are not looking for 7.5% F&I Profit per amount financed, you are missing the mark.  If you are not doing 100% Turnover on all deals in your store, you are missing the mark.

Your team can be trained, and we can do it.

What does training mean?

It means teaching your sales team what to say, and more importantly what not to say.  It means teaching your F&I team how to maximize F&I Profit.

There are two key/core principles in F&I.

1)      The Hypocratic Oath of F&I

First do no harm.  No matter what, the unit goes out the door.  F&I will never stop a sale and will never prevent a unit from leaving the store.  No reserve, no protective product profit, no problem.  The unit sale is top of the list.

2)      Aggressive and Graceful in Retreat

You never get more than what you ask for in the first place.  The first conversation with the customer has to include the maximum reserve and the best/maximum package of protective products.  When the customer objects, there has to be graceful way to back down, without making the customer feel like they have been “played” in the first place.  It can and should be done.

These do not come naturally.  They come from training.

If your store is not meeting the metrics mentioned above then you are not meeting /following the principles mentioned above.

It is time for training.  That is one of the great things that we do.

Contact us today at info@dealerprofit.com.  We will help!

 

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.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.  Dealer Profit Services is proud to be a member of the Brunswick family.

 

The Rates Are Rising – Stay Aggressive, Proceed With Caution

 

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

Interest rates are rising quickly.  While this should not affect your F&I success, it should affect your F&I behavior.

Many stores encourage or allow all salespeople to provide rate guidance to customers, either by providing a range or suggesting what they think the high rate could be.  This is a practice that needs to change/stop.  With the rapid change in rates, sales have no idea what these rates could be, and suggesting something to customers that simply turns out to be false will sabotage the F&I results and create angry customers.

When customers ask sales about interest rates the answer should be, “They are changing pretty quickly right now, so I just don’t know.  Our Business Manager will go over the market and these rates with you.  Rest assured, we want to do the best we can by you.”

A particularly insidious effect of these rate increases is on ordered boats – and given the inventory situation and history, this is a big piece of the customer market.  The challenge here is that when a customer wants to finance and gets qualified on order, they may have to requalify when the boat arrives (most approvals are good for 60 days.)  In this financial market, the requalification issue is not that the customers don’t remain qualified, it is that the rate they qualified for initially is no longer available and may have increased by one-half a point or more. 

The effect of this rate increase is that Finance has an ugly choice – try and raise the rate initially quoted to the customer and risk the sale, or sacrifice F&I profit.  Generally, as long as a good job has been done on Protective Product sales with good profit there, giving up some reserve to protect the overall sale and the Protective Product Profit is the better idea.

This just reinforces the value of aggressive Protective Product sales.  The profit on these products can help maintain a baseline 5% F&I profit on unit sales even when the reserve has to be sacrificed – and there is no risk to the sale on a rate increase.

It is likely that rate increases will continue for the foreseeable future.  Prepare your team and your strategy.  Keep your customers satisfied by delivering the correct message at every step.  Make sure that Finance is focusing not just on Reserve (although that still remains important) but also on Protective Product profit, to protect against rate changes.  Nothing comes easily – profit still can.

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 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.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.  Dealer Profit Services is proud to be a member of the Brunswick family.

 F&I Profit Tells All About F&I Success – Are You Driving 4% F&I Net Profit On Unit Sales?

(You Should Be)

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

Inside your store, F&I success has only one measure, F&I Profit measured on unit sales.

What does this mean?  It means following the two fundamental principles of F&I:

1)     The Hippocratic Oath of F&I

First, do no harm.  F&I will never cost a sale.  If, at the end of the day, or the end of the process, if there is no reserve, or no profit on Protective Products, or even no Protective Products, the unit will still leave the store.  Every salesperson needs to have 100% confidence and trust in this principle.  F&I will NEVER put sand in the gears of a sale.

2)     Aggressive and graceful in retreat

You never get more than what you ask for the first time.  The first offering to the customer, finance or cash, should maximize reserve, if appropriate, and the maximum profit protective product package.  Always be prepared with a graceful way to back down and maximize profit that way.

One note, you only maximize your backend profit when all your cash buyers are offered the opportunity to convert to finance and the, whether they do, or not, offering them the full set of Protective Products.

There are a couple of key elements in all of this. Boats and RVs are lifestyle purchases, and so financing and Protective Products are lifestyle facilitators.  This is the complete opposite of the auto industry – so don’t get caught up in automotive practices.  Make sure your lifestyle messaging everywhere is on target.

The other part is that 100% of your customers, cash and finance, need to meet your business manager to have a couple of conversations.  First, for cash buyers, “If you are paying with cash, you must have great credit – wouldn’t you at least like to see your finance options and maybe preserve your cash for more fun in your lifestyle?”-  Second, “The Protective Products are just designed to help protect your lifestyle and minimize the impact when something does happen – and it will.  Let me tell you how they will help you…”

When the principles and those conversations become your standard you will see F&I Profits rise.

There are two key potential metrics of F&I Profits once you are doing everything, including 100% Turn-Over.  The first metric is – are you doing 100% Turn-Over?  The second is, what is your Net F&I Profit on Unit Sales?

Net F&I Profit subtracts salary, office space costs, bureau pulls, disposal costs, and all other associated costs from your Gross F&I Profit. 

If your Net F&I Profit per Unit Sales is less than 4%, you still have work to do.

Let’s make 4% Net F&I Net Profit your Gold Standard!

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 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.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.  Dealer Profit Services is proud to be a member of the Brunswick family.

Compliance Is Part Of A Comprehensive Finance Program

 

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

Every dealer, who cares about maximizing profit, needs to be offering complete and inviting F&I services.  To protect that profit, each dealer needs a comprehensive Compliance program.  These are tightly integrated and ultimately, while one is profit-generating and one is profit protecting, are completely complimentary.

The F&I Services offering must begin when the customer first makes any contact with the dealer – be that website, advertisement, marketing campaign, or whatever that first customer contact looks like.  That first contact, and continuing contact, must broadcast the message, “Competitive Financing Available.”  Every customer who comes in contact in any way must know that the dealer offers financing.

Comprehensive compliance starts when the dealer receives anything of value from the customer.  What does “anything of value” mean?  Following is a partial list:

·        Cash (or any equivalent – there will be a point where banks take over)

·        Any personally identifiable information

o   Social Security Number

o   Driver’s License Information

o   Employment Details

·        Credit Card Information (depending on how it is received/taken)

·        Anything that could be used for Identity Theft, Identity Fraud, Money Laundering, Illegal Purposes

F&I Services have to start early to be effective.  Customers have to know you can deliver and then they have to know that you will deliver complete F&I.  The first time they meet with your salesperson, they have to be introduced to the idea that they will also meet their Business Manager to ensure ideal delivery (the Business Manager will also handle contracting and will present all of the available Protective Products.)

When a customer comes in, whether to buy a unit or a part, they may start providing personal information of value, or they may provide cash.  Compliance conformance or failure starts at that moment.

Cash purchases are reviewed by the US Office of Foreign Asset Control (OFAC).  They ensure that cash purchases are not being made by individuals or entities who are terrorists or other entities identified by the US Government as restricted from doing business in the US (such as drug Cartels.)  All cash purchases regardless of amount (while certain reasonableness guidelines should be applied) must be checked on the OFAC Database (an easy online database that only requires basic ID information – name and address is usually enough).

This check is easy – failure is expensive.  A penalty for selling to a prohibited entity can result in a fine of up to $1,000,000 and up to 20 years in jail.  This can put a big hit on F&I profits.

For non-cash customers, the dealer will be receiving a lot of personally identifiable information.  All of it must be verified and protected. 

Obtaining this information provides the Business Manager with the information needed to provide the best financing choices available – and to offer all of the lifestyle protecting Protective Products that make sense – and make money.

On the Finance side, there are two fundamental principles: 1) The Hippocratic Oath of F&I – First, Do no harm – Make sure the deal gets done; 2) Aggressive and graceful in retreat – You never get more than what you ask for the first time – Put it all in on your first conversation and then be able to back down in a reasonable way.  These principles ensure maximum F&I profit.

To get to maximum profit a lot of personally identifiable information has to be obtained, retained, and potentially destroyed.  Failure to do all of these correctly could more than wipe out the profit obtained.

Identity theft costs are almost incalculable.  Failure to properly destroy personally identifiable information could be $2,000 per incident and failure to protect it could be the same, and these are federal penalties beyond the civil suits.  These are costs that can easily reduce F&I Profit to zero.

To maximize F&I Profit a dealer has to start at first contact.

To minimize F&I Compliance loss potential a dealer needs to care that the FTC and CFPB have said that they care about “good faith” (meaning that the dealer has tried to do the right things from a compliance perspective) will be considered in the event of a compliance issue – and the FTC, in particular, has said that they will be looking at dealerships.  It is critical that dealers do “good faith” compliance right.

“Good Faith” Compliance means:

·        Full Compliance Manuals with regulations understood and enforced by a Compliance Officer

o   Red Flags

o   Disposal

o   OFAC

o   Safeguard

o   USA Patriot Act

·        Compliance Training

o   Documented for all employees at all times

·        Compliance Inspections

o   Documented on a regular (weekly) basis

·        Compliance Tools

When a dealer has the best F&I sales practices coupled with the best Compliance practices the results will always lead to the best overall profit results.  Learning how to do both is critical for dealer profits.

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 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.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.