Dec. 28, 2009 – Keys to building F&I per vehicle sold revenue
December 28, 2009
Filed under Archives
These articles recap some of the opportunities uncovered by our GSA Powersports Consultants during actual consulting visits. These are followed by recommended actions that address these opportunities. Our goal is to provide you with ideas to help improve your dealership.
This 30-plus year-old, single-line dealership recently moved to a new, professionally designed facility. They sold just under 500 new and used units this past year. The owners have worked in most of the positions so they have an intimate knowledge of dealership operations.
They are located in a rural town with a population of 40,000. However, their surrounding market area contains more than 200,000 people. They are located on a main road less than a mile from a major freeway, but they have no freeway visibility. It was suggested they use billboards to build awareness and attract more of the passing traffic.
In this second part of a series on this dealership, GSA consultants provide an analysis of the store’s sales and F&I departments.
John, the sales manager, has an excellent background that includes sales and business management training as well as dealership experience. He was involved in 20-group activities with a previous employer.
He appears to have the aptitude and attitude necessary for this position. He certainly has the training. He needs to be empowered to take control as a manager, however.
John has had good training in the process and procedures for an effective sales department. The other salesperson also is very experienced in sales. They both know what should be done in this department, but they are not doing it. They are not using a showroom log or prospect forms, and they do not have any real plan for acquiring prospects or prospect follow-up. Prospecting is an essential part of increasing sales in slow periods. If you aren’t face-to-face with a customer, you should be on the phone with a prospect. There was a discussion of this. John admitted this is something he simply has to do.
They say they are following structured selling processes, but the numbers indicate a tendency to lay down on prices rather than building value to justify the price. They complete worksheets and desk all deals, and they do a good job with customer service. They do regular follow-ups with their customers.
They have a decent preowned program, but need to step it up. Now is the time to score good units at good prices for the coming season. This is an area where they can certainly improve the profitability of the sales department.
John is also the F&I manager. He is familiar with the duties, processes and some of the major products. He could use additional product training and will need a backup for busy periods or in case of absence.
There are many opportunities in F&I. We discussed the need to acquire and sell every F&I product possible. It is important to develop a pre-paid maintenance program and make it a part of the store culture. I provided them with some information they could use in this area.
They have multiple finance sources. With the level of finance penetration they have, they should be selling more in F&I. They are currently at $190 gross PVS, or per vehicle sold. The goal should be to net $300 PVS. This is doable.
They also need an outside source for extended service contracts besides the OE,
particularly for used products.
Develop written “non-negotiable” standards lists for department personnel. After ownership approves, each employee signs the original held by the manager and receives a copy.
Put all policies and procedures in writing so you can hold staff accountable.
Increase new unit GP to at least 11 percent.
Prospect information must be captured in order to follow up and turn them into sales. Ensure all customer information that can be collected is entered into a showroom log or a prospect form.
Develop goals for daily prospect calls and appointments. Provide rewards for achievement.
Provide a lockable, secure area (office and/or file cabinets) for completed credit applications and deal jackets.
Improve penetration in all products and bring F&I PVS net up to $300.
Develop a pre-paid maintenance program — offer it to all qualified purchasers. Train all department staff on the program. Gain their commitment for support. Develop POP and handouts to promote the program.
Seek and develop additional sources for extended service contracts and other products. Offer all F&I products you can acquire to your customers.
Include OE or dealership privacy policies with all credit applications.