In my last article I covered some of the key things dealerships can do to lessen the struggle for F&I profitability. In this article I will expound on one of those key points — the transition from the sales process to the F&I process for your customers.
This process needs to be smooth, well-rehearsed and enforced by management. It needs to be one that ensures not only the ultimate sale of the unit but allows the finance department an unbiased opportunity to maximize its profitability. Bias exists when the sales process that is used is not conducive to finance profitability.
Look at it this way — how well would your sales staff do if the finance managers went up to every customer and advised them what your invoice amount was for the unit they were looking at? It would be challenging, to say the least! Dealerships that don’t implement a set turnover policy and procedure usually struggle to attain any kind of sufficient F&I profitability.
Plant the seed in sales
The feature and benefit portion of the sales presentation is the best time for the first seed to be planted on what F&I options are available to the customer. Typically the best products to mention are extended service agreements and prepaid maintenance. These will not only likely be needed by your customer, most certainly with prepaid maintenance, but they also ensure that your customer will be returning to your dealership. Salespeople should be planting the seed on the coverage available while discussing the factory warranty and explaining that should they so choose, they can extend and improve upon the factory warranty. They should say that this coverage is chosen by many of their customers, and if the finance manager fails to mention it, to please be sure to ask about it.
Write up and payment quoting should also be discussed by front-end management team. Federal disclosure laws make it illegal to “pack” payments or provide “leg” to your finance office. Some of the most successful stores in our industry don’t even quote a payment until the customer is in the finance office. They simply advise customers that the finance manager will go over the various options, and they are not committed unless they are provided a payment they are happy with.
If the customer won’t budge without someone quoting them a payment, the finance manager simply goes out and sits down with the customer at that time. The great thing about that is the conversation is all about payment and not price or trade-in value. For those stores wishing to provide payments, I recommend that you use an average rate and term available to your typical customer. Once the lender has given the approval, then you’ll know exactly what you can provide to the customer.
Once the customer has agreed to purchase the unit at a specific price and completed the application, it’s a great time for the finance manager to introduce herself and conduct an interview with the customer. During this time, she can review any questions she might have from the credit bureau, inquire as to how the unit will be used, how maintenance will be handled and plant seeds on the products they will be offering. She should give the customer an idea of the closing process and an estimate of the time involved. Once this is completed the customer is ready to go on “the path.”
Taking a path
“The path” is a tour through the dealership that stops in the parts and accessories and service departments. It allows customers to see fully how your dealership operates, and gives them a chance to meet the staff and understand what’s available to them now that they are your customers. During the stop in the P&A department, they will be offered suggestions on accessorizing and customizing their new unit. They’ll also be shown all of the appropriate safety gear needed to enjoy their new ride. We recommend that the finance department provide the customer with a “path sheet” that each of the managers can initial after the visit.
When they’re back in the finance office, the finance manager can provide them a $10 gift card to use on their next visit for having taken the tour of the store. Path sheets can be coded by the finance department — if customers have already received approval — to let the parts department know if there is any room available for the financing of any purchases they would like to make.
When they are finished in the parts department, they’ll be taken to the service department by the parts associate and introduced. The service department will discuss the maintenance requirements of the unit, offer to schedule their first service visit and recommend the prepaid maintenance program. When they finish in service, the service department staff should escort them back to their salesperson.
Video is an option
When the finance department is ready, the manager should escort the customer back to her office; it’s more personal and less intimidating to the customer. The finance manger can then present her menu and complete the necessary paperwork. I also suggest that each dealership video record the transaction. You never know when you might need to review the tape should any questions arise, and the review of the closings can be used in training and development of your staff, which is something I’ve done with many dealerships. You should also be sure to post signs in the office stating that you’ll be recording the transactions and obtain the customer’s permission to turn on the camera.
Success in the F&I department is much more than just a great F&I manager. You’ve got to have all the processes and procedures in place that will support that manager in being able to provide your customers a professional experience and opportunity to generate the profits you expect.
Peter Jones is an industry trainer and consultant as well as founder of Peter Jones Powersports. He can be reached at firstname.lastname@example.org or 904/742-3080.
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