AutoNation Inc. has created a policy for its dealerships to present payment options on the showroom floor during the vehicle selection process. This change is an effort to meet customers’ demands for payment quotes before reaching the F&I office, according to Kevin Westfall, senior vice president of sales for AutoNation.

Westfall talks with F&I Management & Technology’s Senior Editor Kristen Force about the menu, called Smart Choice, and why the company expects it to be mutually beneficial to the dealership and customers.

Please explain how the Smart Choice menu works.

The importance of the menu is to get away from the 4-Square and for us to be transparent with customers on the front end. It summarizes the deal and has all the customer information at the top. It gives them the different purchase options, both finance and lease. It starts with the base MSRP of the vehicle and goes through the various discounts (manufacturer discount, store discount, rebate, etc.) and it has the final price of what they’re buying.

How will this improve transparency?

Historically, stores have not told a customer directly: “The car lists for $36,000 and I’m selling it to you for $29,000.” It’s almost never been done. There’s no explanation for how they got down to that price. So, we take them through that and then we detail their trade-in and explain, “Well, the base value for your car may be $7,500, but we need to recondition it and it needs new tires and/or a body panel needs to be repainted. It will be $1,000 less for reconditioning and you have excess miles, so that will be an additional $500 reduction. So, we’re willing to buy the trade-in for $6,000.”

This transparency empowers customers and instead of historically being kind of in the dark, they now have everything at their fingertips. They can fully understand how we arrived at a number and if they want to discuss it or negotiate it, it’s right in front of them.

When is the menu shown to the customer?

Our goal is to present it whenever the customer wants or asks for it. In the typical sales process though, it would be after they’ve done a test drive.

Customers are required to circle the payment they’ve chosen on the page. Obviously, if they negotiate, we re-run a new menu off the new price and then they circle which payment they want to have. When customers look at the F&I menu, that payment will be in the top left corner — it’s very transparent.

How does this help the F&I department?

It makes the finance process significantly easier. The customer is now fully committed to the car and knows what the payment will be. He knows all the parameters and there is nothing hidden. It takes a lot of the apprehension and distrust away because now you’ve had this open, transparent interaction, creating more honesty and higher integrity.

How are payment options presented before a credit report is pulled?

When a customer has agreed to a vehicle and says, “Yes, this is the car I’d like if we can come to terms,” then the sales force says, “Great, I can give you some payment options. We run our payment options based on average credit at our store.” If customers want the payments to reflect their specific credit, a credit report must be pulled. But we are more than happy to give them a menu based on average credit.

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How does the program impact F&I sales if a monthly payment is already decided upon?

Customers will mentally decide they want a payment of $500 and let’s say they agree to a payment of $500 under Smart Choice. Then it’s up to the F&I manager and the products we offer to make customers willing to pay extra dollars to have extra benefits.

Really, this is almost two separate transactions. In our F&I process, the first part of the presentation is, “You absolutely can buy the car for the base payment of $500 today. However, that might not be the best option for you. Let me explain some other benefits that can enhance your ownership experience.”

What if a customer decides to buy F&I products but doesn’t want a higher payment?

We give them two choices: “If you want to stay at a term of 48 months, your payment is going to go from $500 to $550, or if you want to extend the term to 60 months, your payment will go down to $495 with the service contract.”

What do you say to dealers who don’t want to quote payments on the floor at all?

I think that’s the way of the past. You’ve got to give what customers are requiring today and that’s transparency. It’s part of the respect customers demand. You’ve got to treat them right, answer their questions and you can’t be afraid to give them the truth: “If you buy this car with this down payment, your monthly payment will be…”

When will the program be up and running in all 272 stores?

It will be a year plus to get this into all stores and will cost a couple million dollars for the full installation.

How have dealers responded to the program?

It’s been very well received. But it is a directive from the company, so even if a store wanted to resist, they don’t have a choice. This is how we will conduct business in the future with our customers because it’s the right thing to do. We have not had any push back yet.

How will you ensure all dealerships follow this directive?

We have a customer tracking system and when customers come in we input their names. We’re tracking how many customers come in, how many menus were produced for each customer and if they bought a car or not. We rank the stores every day with a green, yellow or red designation. If a store has 100 customers come in, I’ve got to have at least 100 menus.

We’re also going to take this to the next step and do after-sale surveys. We’re going to contact customers after they’ve purchased a vehicle and ask them questions, such as: Were you presented a menu? Did they do it in a particular order? What were your thoughts and feelings about it?

We want to really make sure we treat customers with respect. Customers have a lot of choices, so we need to be better than everybody else. The way to do that is to treat them better, make the process quicker and more efficient and provide them with all the information they need and want.

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