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Mad Marv

Fear Factor: When Customers Say 'No'

December 7, 2012

As F&I managers, we live and breathe our products, analyzing their functions and any compliance issues that may arise when they are presented to a customer. In doing so, we become convinced that everyone needs and wants our products — that is, until our customers tell us otherwise, right?

And, boy, a sharp increase in customer resistance to our products can really do a number on our confidence, and send us scurrying for cover. Heck, there are times when you’re just wishing the sales department won’t deliver another deal that day. Yes, fear is the F&I manager’s greatest enemy. It causes us to believe the customer won’t buy anything or won’t be able to afford the product before it’s even presented.

So, for those of you going through a funk like that, I thought I’d use this month’s column to examine the three most common customer types that object to your products.

1. The Self-Insured: Yep, believe it or not, there are people out there who set aside enough cash just to cover car and home repairs. Selling them a service contract or any other product isn’t going to be easy. You’ll find that these types usually spend a lot of time researching a vehicle’s reliability record before they even step inside the dealership. They do that so they know they’re making the right decision by riding without extended coverage. They rationalize this by figuring how long they will actually drive the car and what their projected cost of ownership is going to be. Good luck converting this customer.

2. The Proud Minded: Yes, some customers are so proud that they won’t admit that breakdowns and total losses due to an accident or theft are real possibilities. Admitting this means they might not have made a good decision, and they don’t want to look bad in front of their family and peers. So, they forego the opportunity to protect their investment and will use the standard smoke-screen objection: “Son, I’ve been drivin’ Fords for 30 years and ain’t never had a problem.” Now we know this isn’t true, but to argue with this type of customer is dangerous.

3. The Budget Buyer: Now, I’m sure you have a variety of ways to address whatever objection the budget customer utters. But keep in mind that some of these customers have already been hammered on payment by the desk, and that they could already be stretched beyond the max before they’ve reached your office. That means no amount of silver-tongued persuasion is going to make them budget another nickel. 

Consider the mental battles going on in a baseball game. The bases are loaded, there are two outs, your team is down by two runs and you’re strutting to the plate. Gamesmanship is being played between you and the pitcher as you exchange glares with him. Yes, you’re wondering if you have what it takes, but so is the pitcher.

Hey, the bases are loaded, you’re batting over .400, and all you need is to get the ball over the infield. Yeah, he looks calm, but visions of you sliding into second after clearing the bases with a double into the gap are also running through his head.

Well, folks, the same goes for us in the F&I office. Yes, it’s difficult to overcome the “Nos” floating around in your head, but don’t psych yourself out before the customer has even said a word. Sure, they’ve already committed to the vehicle before they arrived in your office to finalize everything, but they’re just as pensive and nervous as you are.

Listen, it’s easy to focus on the negatives. There is so much your customers get exposed to when they’re preparing to buy a vehicle. But remember, they only do this once every few years. We do it every single day of our working lives. We’re the professionals, and if anybody has reason to be afraid of making a wrong turn, it shouldn’t be us.

So, don’t focus on hitting a home run every time you step up to the plate. Just concentrate on getting on base. Everything else will take care of itself.  
Marv Eleazer is a finance manager at Langdale Ford in Valdosta, Ga. E-mail him at


  1. 1. The Negotiator [ December 13, 2012 @ 01:47PM ]

    Just tell them that the financial insitution they're financing through won't buy the paper unless they purchase a service contract - aka extended warranty. Or tell them that the low rate you've obtained for them is based on the assumption that they will purchase GAP and a service contract. Works for me about 90% of the time!

    @The Negotiator: Thanks for telling our readers what not to do.

  2. 2. D Rock [ December 15, 2012 @ 09:06AM ]

    Nice article Marv ! I do at times find myself struggling with all the " Nos " going around in my head, but then I regroup by re-watching the videos here on the F and I Showroom site. Interesting comment from The Negotiator though, I hope he was just kidding !

  3. 3. Mad Marv [ December 16, 2012 @ 08:09AM ]

    Thanks for the kind words, D. I'm certain he was.

  4. 4. r gonzales [ December 18, 2012 @ 08:30AM ]

    Great article! After every turn I always analyze what the customer told me and how they acted on the sales floor. Were they difficult? What were they saying on the floor? Did they have many objections? By doing this I can affectively analyze if I did everything I could to sell the customer. Sometimes I beat myself up too much but realize that this customer was just not going to buy no matter what I said or presented. Also, this gives me a great insight of whether I did a great job or they were just ready to buy anything.

  5. 5. The Negotiator [ December 18, 2012 @ 02:07PM ]

    OK, OK - I was just kidding on my previous comment... great article Marv!

    @Negotiator: I was hoping that was a joke. Thanks for reading and participating. We won't hold that one against you.

  6. 6. Mad Marv [ December 18, 2012 @ 07:52PM ]

    Thanks R. I beat myself up too much sometimes as well. I often rehash the day's events on my drive home trying to figure out just WHAT I could've said that would have turned the tide on that customer who just wouldn't turn and arrive at the conclusion that those are part of that 10% that God Almighty couldn't close. These are the types that would charge the repair on their credit card and pay 20% interest rather than freeze the cost of the repair at the point of sale. It just blows me outta my chair!

    @The Negotiator-Glad you were kidding as I knew you were. Thanks for reading. Readers are Leaders!

  7. 7. Dina Wilson [ January 04, 2013 @ 10:53AM ]

    Marv, great article. I also rehash the deals from the day and do the "wish I would've said this or why didn't I say that" on a particular deal. There are always that 10-15% that buy nothing, the 10-15% that buy everything (and we love them) and the 70% that we have to show the value in the products to get them to say "YES"!

  8. 8. The Negotiator [ January 04, 2013 @ 01:26PM ]

    I'm a corporate auditor for a dealer group on the West Coast. I made my previous comment to see if anyone said something like - "I do that too!" Anyhow - I like your articles and one of my favorite audits is an F&I/deal compliance review.

    But I digress... do you guys really believe that it's in the customers' best interests to sell them a 75K or 100K mile service contract on a new vehicle for $2K - $3K? The way cars are built these days, it's unlikely that they are going to have anything go drastically wrong before 100K miles. I'm utterly shocked at how many customers we are able to penetrate on these things. Of course, our 'Warranty' company is a related party and owned by the owners of the dealership and some officers, and they are laughing all the way to the bank. Just curious if you guys really believe that 'extended warranties' are a true benefit to the consumer, because it's clearly a benefit for the dealership to sell them one.

  9. 9. Mad Marv [ January 04, 2013 @ 02:59PM ]

    I'd love to trot out my tech's W2's which would rival many F&I managers I know. I oft inform customers that these guys make their living repairing cars that were maintained yet broke down before 100K miles. We all know that service contract companies won't honor claims when the customer fails to maintain their rides which debunks the myth that a well maintained car never has trouble. Our dealer principal is so persuded that service contracts are great security products that he bought one on his daughter's new '13 Escape. Most F&I managers believe the same way and own the products they offer customers including yours truly.

    I also remind customers that the confidence level of manufacturers is usually 3 years/36000 miles. Why would we try and outsmart them by forgoing coverage since they manufacture these things? Sure, they could offer cars with BTB 100K mile coverage but the cost of the vehicle would be significantly more. If cars are as trouble free as you suggest then why do the manufacturers have robust parts departments as stand alone profit centers and offer their own version of service contracts? Because planned obsolescence is designed into everything we buy including automobiles.

    Naturally, insurance companies and dealers offering the coverage make money or they wouldn't be in the business of selling them.

  10. 10. The Negotiator [ January 04, 2013 @ 04:08PM ]

    You bring up some good points Marv - I suppose that's why you're an expert in the field. I think we push our F&I guys to get at least 50-60% penetration on service contracts. What would you consider to be a good benchmark on service contracts, just out of curiosity?

  11. 11. Mad Marv [ January 05, 2013 @ 06:55AM ]

    Most surveys including 20 Focus Group studies place VSC penetration somewhere around 35% nationally on average. Obviously the more focused F&I managers will run better numbers which also reflects how poorly some are faring. Franchise, commercial sales and clunkers can all play a part in VSC penetration but I'd say 45% should be a minimally acceptable number.

  12. 12. Chris Muldoon [ January 10, 2013 @ 12:57PM ]

    To "The Negotiator", I've been in the Ford business for 27 years, 20+ years in the F&I office. Both of the vehicles we own are covered by Ford Premiumcare ESP. The perfect car will never be built and even if it was 99% perfect that still leaves MANY chances for parts failure. Service contracts are certainly not a waste of money for the consumer.

  13. 13. howell clark [ January 11, 2013 @ 07:34AM ]

    marv with regards to the budget buyer, many of them are living at the edge and are exactly the ones who need vsc the most as they can least afford a major repair. while working for a ford franchise many a time folks came out of service and traded a car with 50-80k on the watch and wanted to trade because they had good enough credit but not 3-400 dollars to pay a shop bill. they usually insisted that shop bill be included in the deal.

  14. 14. Mad Marv [ January 11, 2013 @ 09:42AM ]

    You're so right Mark. I stress your point emphatically when dealing with those type buyers and point out how one repair can wreak havoc. In this case this type buyer can't afford not to opt for the coverage.

    The budget buyer I was referring to is the penny pincher that is adamant and slams the door before you even get a chance at offering scenarios where they would need coverage. I liken these buyers to people who clip coupons and rummage through sale items at a department store spending hours trying to save a nickel. These types rarely will return to the service department for maintenance rather choosing a Jiffy Lube or WalMart believing they're getting a bargain.

  15. 15. F&I Newbie [ January 14, 2013 @ 10:50AM ]

    Hey Marv, I'm new to the F&I world - day 12 - and a peer from another dealership pointed me here. I'm scheduled for some kind of official training in March, but I don't want to build bad habits that I'll just need to scrap in 2 months time. Can you point me in the right direction? Thanks!

  16. 16. Mad Marv [ January 14, 2013 @ 01:13PM ]

    Congrats on your new position! F&I is the most exciting job I've ever done and I hope you feel the same.
    Anytime your dealer wants to send you to training, never turn him down. ANY training is valuable. Being new to the business, you're likely to soak up everything like a dry sponge so I encourge you to get all you can.

    Professionally, bad habits can best be described as any action-or lack thereof-which causes your productivity to digress so I wouldn't worry too much about being exposed to those in a training seminar. On the other hand, listening to underperforming co-workers will do the most damage so try avoiding people who are constantly negative and bad mouthing upper management.

    If you're satisfied with your pay plan and work environs then keep your nose deep in self development. It will pay off.

    There are a lot of great training programs out there and I would imagine you're already enrolled in a top flight class already. Your dealer knows just how important F&I income is to his operation and isn't likely taking a chance on a company to train you that doesn't have a provable track record of success so embrace the opportunity.

    I would also recommend perusing through the F&I forum this website supports. There are also several good groups on Facebook as well as other trade publication supported forums to draw real world experience from.

    Thanks for reading.

  17. 17. The Negotiator [ January 17, 2013 @ 01:40PM ]

    To Chris - thanks for your input on the subject... so you went with the factory service contract, eh? Does your company have an "in-house" service contract that you also pitch? Basically, the point I wanted to make is that actuaries do in-depth reviews of the claim history on every make and model, and provide pricing recommendations to sell the service contracts so the price exceeds the claims on average. Therefore, on average, the average joe consumer will pay more for the service contract than they will get back from claims. It's like that for every product, including big screen TV's and stereo equipment at Best Buy. Therefore, any smart consumer will forego service contracts/product protection programs (aka extended warranties).

  18. 18. Joe P [ January 17, 2013 @ 05:36PM ]

    Yea, I told my wife the same thing about my life insurance. I said "do you really think the life insurance company thinks I'm gonna die before I'm 76? I doubt it too, so I ain't payin $500 smackers a year just in case I do! Heck the average guy lives to around 72 so I gotta be at least average, right hunny?"

  19. 19. Mad Marv [ January 18, 2013 @ 10:41AM ]

    As an F&I producer, it's an easy habit to begin looking at our products as though we might not purchase them ourselves based on our current financial picture. Our opinion is of little value when dealing with the customer because we're not the buyer. The customer's financial issue is the only thing that matters and we should always bear this in mind when doing our job. Hence, we should offer the products they qualify for without prejudice.

    We must remember that VSC/GAP/Credit Insurance are all Security based products that offer no real value in terms of dollars and sense unless a problem occurs. Most customers understand this which is why they opt to be protected, simply put-peace of mind.

    I own these products myself.

  20. 20. Ben Bender [ January 21, 2013 @ 04:23PM ]

    You said 45% penetration should be the minimum acceptable figure. From your perspective should a delaership running 80% finance have a different goal than one running 45% finance?

  21. 21. Mad Marv [ January 21, 2013 @ 06:15PM ]

    Excellent question, Ben. Obviously, higher finance penetrations should yield higher product sales. However, there may be no "correct" answer to your question but-generally speaking-the more opportunities you get to finance customers the easier it will be to sell product. I would think 80% finance penetration should require at least 50% but I suppose there is no magical number here due to the dynamics.

  22. 22. Mick [ January 26, 2013 @ 11:57AM ]

    Marv, I don't think that figure takes into account dealerships with lots of subprime business where payment calls and "you'll take nothing and like it" call backs are normal.

  23. 23. Mad Marv [ January 26, 2013 @ 06:53PM ]

    You're absolutely right Mick! There is no perfect formula. The only thing that matters in tracking progress is comparing YOUR numbers against YOUR previous history. That's the only way you can know if you're improving.

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Author Bio

Marv Eleazer

Finance Director

Marv is no insider. He’s an actual F&I manager with more than 20 years of experience. Get his from-the-trenches take on the industry every month at

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