September 2008 - Feature
8 Ways to Maximize F&I
No matter if your store is categorized as small or mega, your dealership is leaving money on the table if it isn't utilizing an F&I department. F&I expert provides the eight keys to kick-starting your F&I department.
By Ron Martin
The powersports industry, like most retail markets lately, has gone through some challenging times. Some observers look at this environment negatively, and others see this as an opportunity to change by applying some entrepreneurial spirit and creativity.
If you evaluate powersports revenue sources for 2007, one area stands out as being the department that can change the bottom line income of the typical powersports dealership — the F&I department. In 2007, a powersport dealership’s F&I income accounted for between 1 and 3 percent of total sales, according to Powersports Business’ “Market Data Book 2007.” The percentage of sales varied depending on the size of the dealership. Smaller stores put less emphasis on F&I income, while the mega stores put more emphasis on F&I. This gave mega stores 3 percent of income toward total sales.
I think it is safe to say the F&I department is one area that offers tremendous profit potential for powersports dealers, regardless of the size of the dealership. There is no department that can add as much to the bottom line of an income statement than F&I. It doesn’t require the capital investment other departments require to increase exponentially. All it takes is doing things right.
In the spirit of 8-8-08 that the Beijing Olympics brought us, I give you the eight factors that will maximize sales in the F&I department without using a large capital investment. And yes, these factors apply to every dealership, whether small, medium, or mega.
1. Get the right commitment from the dealer
Understanding that F&I can be a profit center starts with the dealer. That means the dealer must make it very clear to employees that the products offered in the F&I department bring a tremendous benefit to their customers, and that not giving customers an opportunity to have those benefits is a disservice to them. If the dealer isn’t committed to maximizing F&I income, then it’s simply not going to happen.
2. Use the right F&I selling system
Whether or not you use a menu, a planned presentation is the selling system that works best. I understand you can’t use a planned presentation for all customers, but they generally fall into one of five buying personality types. There are people who never buy, people who buy everything, people who evaluate their decision, people who buy because of how the product will affect others in their life, and people who want you to just get to the point of your presentation.
People may have different needs, but that doesn’t mean you don’t use the same presentation. The only difference is how you respond to objections and transition back to your presentation. You need to learn how to handle or deflect the objection so you can get back to closing the deal.
I recommend an electronic F&I menu because six years ago I realized that menu selling was the best way to get customers to make a decision. I prefer an electronic version because of the flexibility it provides, as it allows the F&I manager to give a professional presentation, achieve compliance, change options on the fly, and give the customer a natural alternative close, “Would you like option A, B, C, or D?”