Smart F&I managers can thrive in this slump.
Although sales may be soft, dealers and finance managers are maximizing their opportunities in a number of ways.
“It’s definitely not a time to panic,” stresses Derek Sloan, VP Sales for Canada, Sym-Tech Dealer Services. “It’s an opportunity to stay focused on a better quality customer interaction so that you’re maximizing your opportunities. This is a time to refine your processes and sharpen them even better.”
He recommends slowing things down. “Really explain your products in depth, and follow your process to a T,” says Sloan. “Make sure you’re not taking shortcuts. Take the time to make sure that customers are happy, and they’re informed, and they’re making decisions that are right for them.”
Perhaps processes need a closer look. “Review your current process and look for ways to improve it,” says Sloan. “Perhaps now is the time to improve it. Where can you get some other best practices or innovative approaches? Maybe it’s a good time to invest in some training.”
Sloan adds that this is a good time to embrace technology. “For those who are not utilizing any type of menu technology or presentation tool or working with customers online, this is the time to do so,” he says. “Because customers are, of course, moving in that direction more and more.”
If an F&I manager is in a dealership that perhaps has been reluctant to move in that direction, this may be a good time to advocate for change.
Sloan suggests working with the existing customer database. “Look for your service customers who have not maybe taken advantage of some of the F&I products in the past, who are maybe coming out of manufacturer’s warranty,” he says. “Get a list of customers coming out of manufacturer’s coverage, and put together a solid plan to contact those customers. Give them a special offer specific to mechanical breakdown protection.
“There’s a whole database of customers sitting right there that they can hone in on,” Sloan adds. “And you’re doing a service to them. How many customers really think about how they’re running out of factory warranty?”
There are also those customers who have not bought anything within 30 or 60 days of picking up their vehicle. “They can follow up with those customers within that period of time.”
Back to basics
According to Jeff White, F&I trainer, Maximum Dealer Solutions, it’s about getting back to the basics. “There are so many products in F&I that some get lost in the shuffle,” he says. “Your core products like warranty, chemicals, and your insurances seem to be the ‘go to.’ The job loss insurances seem to be picking up a little bit of steam, too.”
He finds that what works best in a soft market are warranty sales and maintenance plans. “The maintenance plans are what keep people coming into the shop long-term for service,” says White. “Vehicle sales are what provide our service department with customers.”
To truly understand the scope of the dealership, it’s important to understand that the first priority is to always sell extended service plans in order to get those customers into our service departments.
“That’s what’s going to give you long term survival,” says White. “Service plans are the end game; it’s a hundred yards of work, not just the five yards. It’s getting an immediate profit for the dealership, but having the security of knowing that now you have a secure, captive service customer for half a decade.”
Selling a maintenance plan also saves customers money. “I’m essentially saving a customer 50% off the price they pay at a service counter in the aftermarket,” explains White. “That’s found money. It’s money they’re going to spend anyway, that’s part of their overall cost of ownership. But they don’t think of it that way until you explain it to them.”
Retaining service customers gives stability to the dealership. “The F&I manager’s job is to increase the profitability of the dealership,” says White. “You have to look at the big picture.”
He also points out the dangers of long-term loans. “If people shorten their term, and invest an extra hundred dollars a month—which is money they might have spent anyways—take the overall costs, keep them the same and suggest they take a three to five-year exit plan, instead of a six to eight-year exit plan,” says White. “From a dealership standpoint, that means I’m going to sell two units every ten years to your one.
“An extra two units means an extra $8,000 in profit for the dealership in that 20 year span. If you have 1,400 or 1,500 customers, then you could imagine how much that adds up. Every deal matters.”
Long-term loans also cause damage to customer credit. “That can damage a customer’s credit so badly that they can’t recover from it,” says White. “And then who’s going to fix that problem? It’s a huge problem in the industry right now. These customers are coming in and nobody is looking after them. The dealership has to have the courage and information to properly talk to customers.