10 F&I Landmines to Avoid

It doesn’t take much to turn a customer off to your pitch, but there are things you should avoid at all cost. In fact, some of the behaviors you need to avoid buck some long-standing advice taught to every new generation of F&I managers.

My company recently completed a survey of automobile consumers and compiled a list of negative responses they identified immediately after experiencing the F&I process. To get on this list, the customer had to show a strong, somewhat vitriolic, opinion of an action or impression from the F&I manager. It should be noted that the F&I managers surveyed in these same interactions rarely seemed to recognize the magnitude of the customer’s negative opinion of them and the process.

The good news is my company discovered that many of the negative responses, which we detail below, can be identified and corrected with a simple acceptance and understanding of the issues. The following is an explanation of the responses consumers disliked most, starting with the least harmful error and ending with the most problematic.

10. Overfriendly

This impression occurs as the result of the notion that establishing rapport with customers makes them more likely to buy F&I products. It is easy to understand the logic of this idea, given that rapport is an important element of selling an automobile. However, the F&I process is a completely different science than selling a car. Top F&I performers know the key to F&I performance is establishing credibility, not rapport.

The keys to building credibility are immediate disclosure, no nonsense presentation of facts, and an attitude of professionalism. If you focus on full, honest disclosure, a professional presentation of the facts, and an offering of options that the customer can readily understand, you will get better results than trying to make them “like you.”

9. Felt Tension

What this really amounted to was the customer’s resistance to being “sold.” The feature-benefit sales approach made them uncomfortable. It’s comparable to the way you feel when the doorbell rings at home and someone tries to sell you something and won’t go away unless you are rude or abrupt. Consumers are more sales resistant today than ever before. However, customers feel no tension when the various products are quickly and simply presented as options for them to choose. This is why I recommend that F&I managers stop selling and start offering options. The key here is to let the customer decide. And if you offer your products properly, the customer will choose more products than you can ever upsell. If they feel sales pressure, they will go into sales resistance mode and fight you all the way.

8. Excessive Time in Process

This chart shows the actual acceptance, retention of information, and purchased products along the F&I timeline. These measurements were among very experienced F&I managers who were still trying to “up sell” their products.

When I started in the car business in the 1970s, the longer you kept a customer in the dealership, the higher the closing ratios and gross profits you earned. However, that is no longer the case. Our sales research shows that, all things being equal, faster processes result in higher closing ratios and gross profits.

This certainly carries over to the F&I process. We now live in a “drive-through” society. Consumers expect the process to be fast and efficient, and their purchase of F&I products reflects that. In a large, nationwide group of top F&I managers we measured, the average total F&I time, including the completion of all paperwork, was around 20 minutes.

This is why we had to revise our earliest four-column menus to a much more streamlined process. The fact is you have between four to seven minutes to present your products.

7. Seemed Dishonest

This customer response had a lot to do with appearance, demeanor and attitude. Every media source in the country has given the public the idea that automobile dealers are dishonest. While we can’t change that, we can, in the customer’s viewpoint, become the exception. Just telling the customer you are honest won’t work. You need to show them. This response is also one of the reasons why I advocate immediate disclosure at the beginning of the F&I interaction rather than subjecting the customer to a “qualifying” interview.

One of the comments we continually get about our very best F&I performers is that they seemed surprisingly honest for a car dealer. You see, anyone can go into a F&I office and lie, cheat and steal. But that’s not strong, that’s weak. Being strong is having the customer say at the end of your process, “We just wanted to thank you. This is the best experience we’ve ever had buying a car.” Remember, disclosure establishes credibility, and credibility equals income.

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6. Confusing Explanation of Terms and Options

This can almost always be attributed to the use of “word-tracks.” Due to inexperience, insecurity, or old-school F&I training, many F&I managers still want to use memorized word-tracks to explain their products. For example, some F&I managers have been taught to present credit life insurance like this, “Wouldn’t it be nice, in the event of your untimely death (is there such a thing as a timely death?) to have a free and clear title to your vehicle delivered from the Motor Vehicle Department to your loved ones or next of kin?”

First of all, that sounds like gobbledygook to the customer. He or she doesn’t really understand what you are talking about. Second, it comes off as a canned speech. Think about it. When you’re at home and the phone rings, and someone on the other end is reading a canned speech, can’t you tell they’re reading off a script? Sure you can. And how do you react? Slam.

The truth is you wouldn’t be in the F&I office if you weren’t a good communicator. Your own natural way of speaking and explaining products is, by far, the most effective, honest and sincere way. Get rid of those word-tracks, and explain the products in your own words.

5. Avoidance of Disclosure

In today’s environment, you are responsible for a full and complete disclosure. However, many F&I managers still avoid the disclosure. One of the reasons they are reluctant to disclose properly is due to how and where they disclose. Many of you have been taught to do all the paperwork and then pile it all together with the contract at the bottom. What’s the reasoning behind that? Simple, if you have customers sign enough forms, they won’t be reading much by the time you get to the contract. Unfortunately, that is old-school nonsense.

First of all, waiting to disclose with the contract works against you. Do you think those disclosure blocks on that contract are designed to help you sell products? No, they are designed by consumer-protection people to scare the customer. If you don’t believe me, tell me what that “Total of Payments” or “Deferred Payment Price” blocks are for. You sell them a car for $26,000, yet the total payment amount is $34,284. It’s a crazy number.

However, our top performers know that if they have disclosed everything, they almost never get an objection when they disclose. Disclosure helps create credibility. Credibility equals money. Look at it this way, disclosure and honesty are a very clever strategy the customer has no defense for. So, use it.

4. Arrogance

What do these schmucks mean, arrogant? I’m kidding, but you see the point. Let’s face it, sometimes we get a little tired of rejection. Over time, it’s easy to develop a defensive attitude toward a public that constantly assumes things about our character because we are in the car business. After a while, phrases like, “Buyers are liars,” and all of the names we call customers (sometimes the nicest thing we call them is “Ups”) start to manifest themselves in our demeanor. continued on page 22

Make sure you understand that the customer is not at fault for those opinions. It’s what they have been told. The more honest and professional you are in your interaction with your customers, the better they will respond. Credibility is the key to top F&I performance, not rapport. Repeat after me, “We love our customers. We love our customers. We love our customers.”

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3. Unwanted Financial Advice

One of the myths that we have been taught over the years is that we should counsel our customers about their financing and options. I constantly hear F&I managers in the field trying to help customers make a decision by sharing their vast knowledge of finance, or by touting personal endorsements such as, “I buy a service contract on all of my cars.” Who cares? The customer certainly doesn’t.

It’s amazing how negative customers’ opinions are in this area. Think about it. What have they been told will happen to them in a car dealership? Yet, some of you have been told that after five minutes of rapport building, based on your magnificent personality, they will trust your advice or endorsement in this environment. It’s nonsense, and it kills your credibility.

You have to understand that these people really do need and want your products. Your products are good. Trust them. If the customer’s options are presented in a simple, fast and professional manner, he or she will choose them. Understand if customers get one hint that there is something in it for you, they will fight you all the way.

2. Negative Statements Regarding Credit Unions

This is an absolute credibility killer. Some of you who have attended a conventional F&I school have been taught the age-old credit-union conversion. You learned to tell the customer all the things wrong with the credit union, such as chattel mortgage, right of offset, your fellow employees will know your personal information, leave your line of credit open, and the list goes on. Then they are supposed to finance with you. But what do they really do when you try this? They go to the credit union. As an added bonus, you have lost all credibility with that customer.

You see, the best example of credibility’s power is the relationship the public has with their credit unions. They are extremely loyal to the credit union. It’s like a cult. They will drink the Kool-Aid if the credit union manager tells them to.

So what do you do? The answer is to set up direct lending with as many credit unions as you can. When the customer says they are going to the credit union, you can pull out the credit union contract just like your bank contracts, and do the deal at the dealership. This is working everywhere in the country.

I have had dealer principals tell me they didn’t like the idea of creating customers for the credit unions, but you have no choice. Customers are going there anyway. Your decision is whether you want to tap into the credibility they have established and become a “preferred” credit-union dealer. By the way, credit unions will buy a lot of your marginal paper at rates no other lender will offer.

1. Change

This one may be the most important. Through our research of the current market, it has become clear that the retail automobile business has changed more dramatically this year than at any time since the post-war 1940s. And it will never be the same again.

For the F&I professional, the days of living on people with bad credit, negative equity, and ridiculous debt-to-income ratios are over. You’re going to have to learn to make money selling your products to people who have good credit, are financially stable, and are educated buyers. And they are going to be tighter with their money.

You need to be willing to accept change — even embrace it. The old ideas and ways of doing business are over. You have to make up your mind to accept this new reality.

As the list of dealerships thins out this year, there will be a few hundred fairly good F&I managers coming into the job market. You need to make sure you are adapting to the “new” reality and creating the performance your dealer will need to survive. Don’t worry, though. There are good answers out there and we’ll be sharing them with you over the next several months.

There is still a bright future and a great career for those of you who keep an open mind to change and become a positive force in your dealership. The fact that you have taken the time to read this article says you are probably one of those who want to learn, improve, and therefore, will probably be around in the future.

George Angus is with Team One Research and Training, a research and training company that specializes in scientific, research-based program development and training programs for the automobile industry. He can be reached at [email protected].