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.