The Industry's Leading Source For F&I, Sales And Technology

Article

Solving the eBusiness Puzzle

The eBusiness model has yet to take F&I offices by storm, primarily because dealers don’t see the profit potential. Technology insider offers five reasons they need to join the revolution.

May 2011, F&I and Showroom - Feature

by Matt Nowicki

A few months ago, I was invited to join a panel discussion at the inaugural Agent Summit in Las Vegas. We were there to update attendees on how close we are as an industry to replacing 40 years of rate books, three-part warranty forms and handwritten remittance registers with a technologically advanced method.

The standing room-only crowd made it clear that there is plenty of interest in the subject, mixed with uncertainty about how best to achieve that goal. The eBusiness movement has made serious inroads in a variety of industries, but it has been slow to catch on in the auto business, particularly in the F&I office. So what will drive adoption?

To be clear, eBusiness as it relates to the F&I office refers to four distinct processes: electronic rating, electronic contract generation, electronic customer registration and electronic remittance or invoicing. Administrators understand the benefits of this way of doing business, but it’s difficult for dealers not to think in terms of profit when it comes to these solutions. That’s why past efforts to drive eBusiness into the dealer world have failed to gain traction.

No dealer should expect nationwide, universal acceptance of eBusiness processes to be a profitable enterprise. Margins on F&I products are not what they used to be, and administrators have developed pretty inexpensive ways to handle paper contracts. That means neither dealers nor general agents should expect reductions in product costs.

The eBusiness Value Proposition

Every major F&I product administrator knows the industry must move toward the eBusiness model, and most agents have more than a casual curiosity of what it can deliver. For their part, dealers understand that eBusiness represents the future of the business. Here are five reasons why that future is now:

1. Compliance: Remember, admin-istrators must develop forms for every product they offer. They must also develop forms that satisfy requirements for each state and, in some cases, customize their forms to meet the needs of their customers. And when a single form is updated, the administrators and their agents must physically deliver the new form to every one of their customers. Considering the amount of new product categories being introduced in today’s market,  this delivery process is simply not logistically feasible. With e-contracting, an updated form can be delivered almost immediately.

2. Chargebacks: Even the most careful F&I manager can make a rating mistake. Five years ago, this statement would have only applied to service contracts. Today, there are multiple products that require proper classification, including tire-and-wheel, key replacement, windshield protection and GAP.

3. Customer Satisfaction: There is a perception in the marketplace that an eBusiness process takes longer than the traditional way of doing business. Nothing could be further from the truth, especially if you take into account the amount of additional time spent handling a chargeback. And think about this: When was the last time you signed a receipt with a carbon copy? Heck, most DMVs have eliminated those three-part forms.

4. Data Quality: Even after 40 years of doing business the same way, dealers still deliver unusable contracts to administrators. We still see forms with more than one class checked off, unreadable customer addresses and invalid VINs. And when a bad contract arrives, it becomes an exception, which must be dealt with by at least one person at the administration office, the general agency and the dealership. This is something you won’t experience in an eBusiness environment.

5. Real-Time Reporting: Companies that offer e-registration or e-contracting with an automatic customer registration component allow administrators, agents, and dealers to see a precise picture of the products sold in real time. And unlike information gleaned from the dealership management system, eBusiness allows dealers and agents to see everything about the contract, which is critical when a customer calls to report a claim. With eBusiness capabilities, the claims department can immediately see everything about the customer, even before the claim has been remitted.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

Blog

So Here's the Deal

Ronald J. Reahard
Selling High-Mileage VSC Plans

By Ronald J. Reahard
How do you sell a $3,000 VSC on an $8,000 car? Top trainer offers a four-step process to ensure every customer gets the protection they need.

Selling Warranty Compliance Plans

By Ronald J. Reahard
Do-it-yourself customers will tell you they prefer to save a few bucks by performing their own maintenance. F&I trainer has the perfect response for this common objection.

Handling the ‘Last Car’ Objection

By Ronald J. Reahard

Sold But Not Closed

By Ronald J. Reahard

Done Deal

Gregory Arroyo
Rescinding the CFPB’s Auto Finance Guidance

By Gregory Arroyo
The editor debunks a few myths about the Consumer Financial Protection Bureau, then explains why the industry is on the brink of repealing the bureau’s auto finance guidance.

Still a Work in Progress

By Gregory Arroyo
The editor explains why he put another digital retailing startup on the cover and looks at two studies that point to online car buying and financing still being a work in progress.

It Is Unwise to Lower Your Defenses

By Gregory Arroyo

What's Really Behind the Subprime Pullback?

By Gregory Arroyo

Mad Marv

Marv Eleazer
Your F&I Backup Plan

By Marv Eleazer
Equipment failures can’t stop an F&I manager who is prepared for any contingency. His Madness lists four backup plans you can implement today.

Love It or Leave It

By Marv Eleazer
His Madness is reminded that excelling at F&I requires true passion for the craft. He offers a few suggestions for staying focused and mentally sharp.

G.O.Y.A.

By Marv Eleazer

The Little Things

By Marv Eleazer

On the Point

Jim Ziegler
Sharpen Your Survival Skills

By Jim Ziegler
‘Da Man’ has a plan you can use to survive the collapse of the car business and remain profitable through the dealer apocalypse.

Sales Rock Stars Still Exist

By Jim Ziegler
Da Man says $40,000-a-month sales rock stars still exist. He says you’ll find them on YouTube and Facebook Live.

The New Stooges

By Jim Ziegler

Is Your Quick Lube Driving Away Business?

By Jim Ziegler