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


Measuring F&I Performance

The Father of the F&I menu breaks down how he measures F&I success. He also explains how his methodology can help reduce charge-backs and cancellations.

December 2014, F&I and Showroom - Feature

by George Angus - Also by this author

Last year, my firm completed a study that measured the results of several different F&I processes, menu programs and the plethora of electronic presentation tools in the market today. And whenever we present our findings, we must first explain how we measure overall F&I performance. Our explanation is usually met with this question: “Why does it take so long to come up with your analysis?”

The reason our analysis takes more than a month — sometimes six — is because we measure F&I results using what we refer to as the cumulative scoring system, or “cume score,” to measure F&I department performance. The methodology has several scoring elements, including income per retail unit, product penetration rates, sales satisfaction scoring, balance of income and more. It’s a system we’ve employed since the 1990s, one that serves as a guide to improving overall F&I performance.

See, the problem with many of the tools in the market today is that vendors tend to rely on anecdotal evidence or a simple income-per-unit number to promote them. The problem is that measurement only tells part of the story.

Cumulative Effect
One criterion we include in the cume is the percentage of charge-backs, particularly charge-backs as a result of short-term cancellations. And we weigh those heavily in our scoring, because when you look at net F&I performance, charge-backs have a significant impact on a dealer’s overall profitability. Let’s take a look at the cume scores for these two fictitious dealerships.

Dealer A: This dealer retailed 100 units and made $130,000 in total F&I income. By traditional measurements, that would give the dealership a per-copy average of $1,300. That looks pretty good until you realize the dealership’s charge-back percentage was 25%, so we must subtract $32,500. It also paid 12% in commissions, so subtract another $15,600. That means the dealer’s preliminary net profit from F&I (before operational cost calculations) was $81,900, or $819 per unit.

Dealer B: This dealer also retailed 100 units but only made $110,000 in total F&I income. That would mean the dealership averaged $1,100 in F&I profit per retail unit delivered. However, the store had a charge-back percentage of 12% (subtract $13,200) and also paid 12% in commissions (subtract $13,200). That means the dealer’s preliminary net profit from F&I (before operational cost calculations) is $83,600, or $836 per unit.

So while Dealer A appears to have made more money per unit in F&I, Dealer B actually realized a higher net F&I profit. But there is even more to consider: One fact we have learned in 20 years of dealership performance analysis is that charge-backs, especially short-term cancellations, have a direct effect on sales satisfaction scoring. Our cumulative scoring takes this into account. So let’s add in sales satisfaction scores to our criteria to see which dealership is doing a better job.

Dealer A
Net: $81,900
Sales Satisfaction Score: 780
Income From Reserve: 53%
Products Per Retail: 0.8
Cume Score: 680
Dealer B
Net: $83,600
Sales Satisfaction Score: 910
Income From Reserve: 35%
Products Per Retail: 1.6
Cume Score: 790

We can see that Dealer B will enjoy healthy and sustainable results. We also know that looking at only income per unit doesn’t tell the whole story.

Eliminating Change-Backs
Because my firm’s process development focuses on limiting charge-backs, our F&I professionals have pretty much eliminated short-term cancellations. Hey, we can’t control charge-backs from early payoffs and traded vehicles, but we can control those short-term cancellations. And we can do that while still enjoying solid performance numbers.

So if you want to cut down on those short-term cancellations, you have to measure and quantify them. You will find that most cancellations can be linked to the way F&I products are presented.

For instance, one of the first things we look at when analyzing a dealership’s F&I performance is its income distribution percentage. And what we find is that dealerships with elevated charge-backs and cancellations derive most of their income from finance reserve, with the balance of their income coming almost entirely from GAP and service-contract sales.

What creates that type of income distribution? Well, unfortunately, this is an all-too-common result of processes that rely on old-school upsell techniques, long-winded presentations, and obvious sales tools.

See, the problem with using full-color laminated placemats, professionally rehearsed word-tracks, seven-minute videos, flashy computer programs, intrusive and probing pre-F&I interviews and drawn-out presentations is they don’t hold the customer’s attention. And once the F&I manager realizes that, he or she naturally starts concentrating on selling the service contract. And he or she will stay on that product until it’s sold. If there’s time, the F&I manager may try to get in a few words about GAP.

Well, folks, that’s the quickest way to make customers feel like they’re being sold. It’s also the quickest way to the dreaded sales-resistance response and negating all the benefits of menu selling. Ultimately, the F&I manager turns to reserve to make up for the income they didn’t make from product sales, which then leads to higher cancellation percentages.

So the most effective answer to limiting cancellations is a process that allows the customer to choose without being sold, balances F&I income equally among all the products on the menu, and reduces the percentage of income from finance reserve.

These are the factors we have concentrated on in developing our processes, but we are constantly evaluating new ideas, tools and processes that aim to improve a dealer’s cumulative performance. And when we find the next idea that produces results, you’ll be the first to know.

George Angus is the training director for Team One Research and Training, a company specializing in scientific, research-based program development and training. Email him at

Your Comment

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


So Here's the Deal

Ronald J. Reahard
Sharing the Profit

By Ronald J. Reahard
After losing members of his sales team, a dealer asks the magazine’s resident F&I expert for his take on paying salespeople on F&I income.

Menus Don’t Work Miracles

By Ronald J. Reahard
A fancy new menu can help streamline processes and improve customer engagement, but it won’t replace the hard-won skill and compassion of a true F&I professional.

Avoiding the AAA Objection

By Ronald J. Reahard

(Video) Capture Missed VSC Sales

By Ronald J. Reahard

Done Deal

Gregory Arroyo
GAP Suffers Another Setback

By Gregory Arroyo
The editor reveals the truth behind an NPR report critical of the industry’s efforts to undo the Military Lending Act guidance that put the brakes on GAP sales.

Car Buyers Need F&I

By Gregory Arroyo
Current market trends are playing right into the F&I product pitch, but they also reveal trouble ahead for the automotive retail industry at large.

Protecting F&I’s Future

By Gregory Arroyo

Game Almost Over

By Gregory Arroyo

Mad Marv

Marv Eleazer
Comply Like Nobody’s Watching

By Marv Eleazer
His Madness wants F&I pros to commit to ethical dealings with customers and finance sources because it’s the right thing to do, not just for the very real threat of reprisal.

'We Never Buy This Stuff'

By Marv Eleazer
Every F&I pro gets the occasional ‘F’ customer, but they’re a small part of your business and they’re not worth a minute of mental anguish.

Stop Painting Dealers With a Broad Brush

By Marv Eleazer

I Love F&I. How About You?

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