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

Article

4 Reasons to Keep ’Em Separated

Industry insider warns dealers to resist calls for combining the roles of sales and F&I. He says the two departments must remain separate components of a shared process.

February 2014, F&I and Showroom - Feature

by John Lovin

Henry Ford used the assembly line to mass-produce his Model T in the most efficient manner. His system produced highly skilled workers in every area of production in his factory. For the last century, the assembly line has become the model for factories around the world. And for the last 40 years, car dealerships have adopted a similar system when structuring their sales operations.

In recent years, there has been talk of merging sales and finance by having the salesperson complete the entire transaction. The theory is that this is a more customer-friendly approach that will also cut down on transaction times. Here are four reasons why this theory is flawed and why the hybrid F&I experiment is doomed to fail:

1. Decreased unit sales: Salespeople are goal-oriented people. If their income is supplemented by finance income, their motivation to sell the next car will decrease. It’s human nature.

2. Decreased customer satisfaction: Most salespeople are not very detail-oriented. They are social by nature and the detail required to complete paperwork is not in their DNA. And nothing is worse than having sold customers return to the dealership to sign additional paperwork, which is bound to happen under the hybrid model.

3. Decrease in product knowledge: Salespeople should be product knowledge experts on the vehicles they are selling. They need to constantly hone their craft. They also need to be product knowledge experts on the competition. Adding finance to their responsibilities will decrease the time they can devote to research.

4. Decrease in finance income: A vehicle transaction can take as long as three hours to complete. Do you really want your salespeople to be chained to the customer the whole time? The chances of a quality finance presentation with a complete explanation of features, advantages and benefits are slim. And what if the customer offers to buy the car if the salesperson will throw in the warranty? That is a situation you do not want to create.

Searching for Answers
Many experts agree that something must be done to make the car-buying experience more customer-friendly. I’m not saying they’re wrong; I just don’t agree that combining the roles of sales and F&I is the solution.

So what do we know? We know that today’s consumer is more educated, with 80% of them doing some sort of online shopping before actually going to a dealership. We also know they don’t like the current sales process. So what is the answer? How can we improve the sales process and increase customer satisfaction? Here are a few best practices that are working throughout the industry:

• Improve salesperson training: Most customers know you can’t fit a $50,000 vehicle into a $400 payment. Still, we must train our salespeople to coach their customers into purchasing a vehicle that fits within their budget. If nothing else, this approach will speed up transaction times.

Train salespeople on the proper turnover to finance: Salespeople spend a lot of time with their customer, which means they’ve developed rapport and credibility. What they need to do is transfer that connection to finance by endorsing the finance department and the products it offers. The salesperson’s job is to move the metal; it is the F&I manager’s job to move the paper.

• Finance and sales put the deal together from the first pencil: Many successful stores have their finance director and sales manager share offices. They structure the deals correctly the first time. They also understand that the old days of writing up the deal with an advance of 180% and submitting it to every lender, hoping one will be asleep at the wheel, are over.

• Finance needs to meet the customer immediately: Let’s say a customer has agreed to purchase a vehicle, but the F&I manager doesn’t show up for 20 minutes after the deal was handed to him. Would you wait that long to get to the cashier at Best Buy?

• Finance needs to conduct a customer interview at the salesperson’s desk: There are multiple reasons for this. The first reason is because that is where the customer is comfortable. Second, it is the best way for sales to transfer the rapport and credibility to finance. And lastly, finance can qualify the customer for finance products when and where the customer is comfortable.

Completely restructuring the sales process is not the answer to what consumers want. What’s really needed is a closer working relationship between sales and F&I. And when that happens, the better the experience is for everyone involved — especially the customer.

John Lovin is vice president of Chrysler Capital Consulting. Email him at john.lovin@bobit.com.

Comment

  1. 1. Rebecca Chernek [ February 13, 2014 @ 07:02PM ]

    John-

    I absolutely agree 100%! "What the customer wants is a closer (a seamless process) between sales & F&I"! Let's bridge the gap between the departments- once and for all! A transparent sales process that supports the customer and dealer winning!

  2. 2. Mick [ February 15, 2014 @ 07:11AM ]

    At Best Buy the cashier isn't arranging for you to borrow $40,000 to purchase your new gadgets.

 

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
Avoiding the AAA Objection

By Ronald J. Reahard
Top trainer advises F&I pros to eliminate the ‘I have AAA’ objection by downplaying the very real — but relatively minor — roadside assistance benefit included with most service contracts.

(Video) Capture Missed VSC Sales

By Ronald J. Reahard
In response to a reader question, the magazine’s F&I wiz updates his plan for re-pitching service contracts to customers who declined the protection at the time of delivery.

The Dealer Moved My Goal Posts

By Ronald J. Reahard

Addressing F&I’s Internet Problem

By Ronald J. Reahard

Done Deal

Gregory Arroyo
Protecting F&I’s Future

By Gregory Arroyo
The editor responds to a reader’s question about whether F&I managers are being replaced by iPads and digital retailing tools.

Game Almost Over

By Gregory Arroyo
With the CFPB’s controversial guidance officially repealed, the editor delves into what the bureau was really after in its targeting of dealer participation.

The Repair Is Covered

By Gregory Arroyo

Change Is Happening

By Gregory Arroyo

Mad Marv

Marv Eleazer
Stop Painting Dealers With a Broad Brush

By Marv Eleazer
His Madness has a few choice words for media members who obsess over every act of dealer malfeasance while ignoring their charitable and volunteer efforts.

I Love F&I. How About You?

By Marv Eleazer
His Madness challenges F&I professionals to decide right here and now whether F&I is your career or just a job.

Is That Legal?

By Marv Eleazer

Overcome Your F&I Weaknesses

By Marv Eleazer

On the Point

Jim Ziegler
Bound to Fail

By Jim Ziegler
Da Man returns with a message to vehicle manufacturers jumping into the subscription waters: It ain’t gonna happen.

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

The New Stooges

By Jim Ziegler