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The Psychology of F&I

July 2009, F&I and Showroom - Feature

by George Angus - Also by this author

Having been an avid student of the automobile business for more than 34 years, and having used or taught every technique and strategy known to the F&I profession, it’s become clear that what seems logical is not always the way to go. Because at the end of the day, being successful at a sale or not really comes down to the “psycho-neuro” response of the customer. What’s key for an F&I manager is how his or her process impacts that response.

What is a “psycho-neuro” response? It is an unconscious reaction to a given stimulus in a particular environment that can be measured and modified. More simply stated, there are psychological triggers that cause people to buy or not buy F&I products. While every customer is different, there are some universal “psycho-neuro” responses that apply to almost every customer. For example, how many of you have asked someone, “Hey, have you gained some weight?” If the person looks a little bigger than he or she did a couple of months ago, then that should be a perfectly logical question to ask. However, through trial and error (big error), we have come to understand that such a question evokes a negative psycho-neuro response, regardless if the question sounds perfectly reasonable.

The F&I process works much the same way. As previously stated, what seems logical to us is not always true. Now, to help you avoid these negative triggers, Team One Research and Training has identified five triggers to incorporate or not incorporate into your F&I presentation.

1. Pre-Exposure to F&I Products

Through our extensive testing and analysis, we have determined that F&I products should not be discussed, mentioned, or even recommended before the customer gets to the F&I office. Here’s where logic and results part ways. It would seem that a salesperson or sales manager recommending a service contract to a customer would help sell more products. Not so. We have also analyzed the results of advanced turnover methods, very sophisticated and impressive video presentations customers watch before they go into the F&I office (they don’t work, but they are cool to watch), and every idea we could find to create a positive interaction. The unfortunate truth is the results were the same: No one should present the F&I products but the F&I manager.

2. Titles Are Everything

This is an area where old-school wisdom trumps new-age thinking. The first F&I schools I attended in the 1970s recommended the use of the term “business manager” when referring to the F&I manager. Our testing shows they were right. For example, I knew of a manufacturer’s training specialist who told his dealers to call the F&I manager the “financial services specialist.” This one small change had a negative impact on the dealer’s F&I performance, especially with those customers who intended to finance elsewhere. Think about it. If I’m paying cash or going to the credit union, why would I need to see a financial services specialist? Titles such as business manager or customer business manager work just fine.

3. The Stage-Setter

It is a proven psychological fact that you have between five and 15 seconds to make an impression on someone you meet. Your office is the stage for that critical interaction. So what does your office tell the customer? One of the things I do when I visit a new dealership customer is walk over to the F&I office and sit down. You’d be amazed at what you can tell about the F&I department by just looking at the office.

I once went into a dealership and in the F&I office was a big sign located behind the desk. The heading of the sign read, “The Benefits of Credit Life Insurance and Accident and Health Insurance.” Below that was a list of all the features and benefits. Below the sign were all the plaques and awards the F&I manager had received over the years. On the wall to the left was a giant poster promoting the factory service contract. On the desk in front of the customer was a working model of the alarm system they sold, along with a metal board containing samples of the paint and fabric protector.

So, what was wrong with that office? Think about it. What has every customer heard about that happens inside a car dealership? They are going to get ripped off. The question is where and when. So they walk into the F&I office thinking, “Here’s where it’s going to happen to me,” and up come the walls of sales resistance. Then they see all your plaques on the wall and think, “Not only am I going to get ripped off, but I’ve got the world champion doing it!” Do yourself a favor and get rid of all of that stuff. Make your office look like a business office. Why create a mountain of sales resistance that doesn’t need to be there?

4. Keeping Menus Simple

Consumers are more sales resistant today than ever before. The conditioned response to any hint that they are being sold something causes an automatic wall of resistance that is difficult to overcome with even the best selling skills. That’s why, after conducting our own F&I menu research since 1992, we have adopted a very generic looking menu that looks more like a disclosure document than a sales tool.

We have found that if the customer gets the idea that there is something in it for the dealer, they react with negative resistance. For example, we had one top performing dealer group experience an overnight drop in overall performance. We went in to find out why. After copious digging, we found out that the controller had decided to put the dealership’s name at the top of our menu form in bold letters. That one small change created a measurable negative impact on performance. While that may not seem logical, it’s true. The most effective F&I presentation offers options and lets the customer drive the process. If presented properly, the customer will choose more options than you could ever sell him or her, no matter how good your sales pitch is. The top F&I performers in the country know that, and now you do, too.

5. Credibility vs. Rapport

When you learned to sell cars, you were taught to develop rapport with the customer. People buy cars from people they like, right? And that is true in selling, but it’s not so true in the F&I office. When you ask several thousand people what they thought of the F&I experience, you find that they are quite negative on rapport building and very high on credibility. It has to do with the nature of the interaction and the customer’s expectation. Customers expect a little salesmanship and a dog-and-pony show from a car salesperson, but they don’t expect it from the person who does their final paperwork. That’s why our process uses the first few minutes of the presentation to provide a full disclosure of the terms of the deal. You see, in the customer’s mind, rapport equals baloney, and credibility equals money.

George Angus is with Team One Research and Training, a research and training company that specializes in scientific, research-based program development and training programs for the automobile industry. He can be reached at george.angus@bobit.com.

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