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F&I’s Shifting Paradigm

An Ohio-based general agent believes the F&I industry is ignoring a paradigm shift and a chance to deliver what consumers really want: a better experience.

November 2015, F&I and Showroom - Feature

by Chris Meacham

Physicist, historian and philosopher Thomas Kuhn fathered, defined and popularized the concept of a “paradigm shift” in the 1960s. He argued that advancement is not evolutionary but rather a “series of peaceful interludes punctuated by intellectually violent revolutions.” And when that happens, “one conceptual worldview is replaced by another.”

The shift in my F&I paradigm  began innocently enough. See, a few years ago, I was in the market for an iPad. My daughter Annie convinced me to get it from an Apple Store instead of my favorite big-box retailer.

Despite it being a busy Saturday, we were greeted within minutes of our arrival at the local Apple Store. The specialist quizzed me about how I intended to use the device and my product knowledge. Then, using her own iPad, she showed me a menu of cases, stands and service-contract options tailored to my needs. Once I made my selection, I signed and paid right on the iPad. The specialist then offered to print out or email me my receipt.

I spent about half as much time and twice as much money as I intended. As we were leaving, my daughter asked, “Wasn’t that fun?” It was. Then she asked, “Is that what buying a car is like?”

F&I’s Fundamental Truths
Tesla Motors CEO Elon Musk is responsible for many innovations, all of which were the result of what he calls “reasoning from first principles.” See, rather than innovate within an existing paradigm, Musk believes the only way to truly innovate is to break a problem down to its most fundamental truths and reason up from there. So what are F&I’s fundamental truths?

Well, we know the process needs to be compliant and deliver a premium experience. We also know it must constantly increase results. The process must also serve as a customer pipeline to the service department. We also know most customers dislike the F&I process. It takes too long, the information is muddled — which breeds distrust — and the mediums on which we present our products are antiquated.

For dealers, process standardization and accountability are critical, as is low turnover and higher productivity. Dealers also want educated, highly motivated and tech-savvy F&I professionals driving the process. They also need more Millennials to connect with that growing customer demographic.

So what needs to change? First, we can take a cue from the Apple Store and be sure customers are greeted by trained F&I professionals within five minutes of making a buying decision. We also need to speed things up. In fact, what if, after conducting a discovery interview and excusing himself for 10 to 15 minutes to load the deal on a tablet menu, the F&I pro was back and ready to make the menu presentation on the showroom floor?

Imagine a scenario in which a car buyer never set foot in the F&I office. F&I managers would sit at the sales desk watching deals come together, then they’d go out to the salesperson’s desk to greet and interview customers immediately after a deal is consummated. The F&I office would only be used for obtaining bank approvals and to disclose and print documents, so there would be no compromise on compliance. And F&I managers would be judged more on the experience they deliver than the results of the customer interaction.

Motion Offense
Reducing or eliminating the time gap between sales and F&I will show customers that we understand their time and business is valuable. Better yet, immediate action assumes that the sales process has not ended and the F&I process has not started. Remember our truths?

According to Deloitte’s 2014 Global Automotive Consumer Study, consumers say 38 minutes is an “acceptable” amount of time to complete the F&I process. So when does the clock start ticking? Is it after the introduction or when they first enter the F&I office?

Now let’s break down the typical F&I experience. After spending a couple of weeks researching on the Internet, Joe Customer visits 1.1 stores and agrees to a purchase. Joe then waits 45 minutes or longer to see the F&I manager after enduring the three-way dance between the desk, salesperson and the F&I office. The salesperson then walks Joe Customer to see the F&I “Wizard of Oz,” who is camped out in a room filled with brochure holders. The finance manager then proceeds to pitch his products as well as present payment and pricing options on a dusty computer display that only he can really see.

Since employing a tablet-driven F&I process, Jack Matia Honda’s F&I operations has realized a 40% jump in F&I profit per deal and a more than 200% increase in products sold per deal.
Since employing a tablet-driven F&I process, Jack Matia Honda’s F&I operations has realized a 40% jump in F&I profit per deal and a more than 200% increase in products sold per deal.

I’m obviously overdramatizing this, but if the picture I painted isn’t far off from the experience your store delivers, can you really expect Joe Customer to say “Yes” to anything on the menu? More importantly, is simply polishing up a process consumers don’t even like really the answer?

J.D. Power’s 2014 Sales Satisfaction Index Study underscores just how important it is to get customers out of the F&I office as quickly as possible. It shows that customer satisfaction degrades “with every additional increment of time longer than 15 minutes or less.” It also proves that satisfaction is significantly reduced when the process takes more than half an hour. That means, as the study notes, that F&I managers have 30 minutes to complete the process.

Now, that target process time doesn’t take into account the time a customer spends waiting to see the F&I manager, which, according to the study, can take about 48 minutes. So if time and the customer experience are connected, does that mean the customer experience is linked to revenue and product sales? From my experience, the link is quite significant.

The Mobile Menu
My paradigm shift kicked into high gear in July 2012. That’s when Michael Neri, a forward-thinking general manager for one of my dealer clients, Jack Matia Honda in Elyria, Ohio, received an email promoting a webinar hosted by iTapMenu. We watched the webinar and were impressed, but we couldn’t have guessed the impact it would have until we integrated it into the store’s process.

Working with me on the installation was Michelle Matia, the dealership’s finance director. Our instructions were to wrap the store’s current process around the new tool without changing the culture of the store.

Now, I am a firm believer in the F&I interview. To me, it works to reset the customer’s clock. What Matia and I discovered was how quickly we could get back in front of the customer after conducting the interview at the salesperson’s desk and loading the deal into the iTapMenu in the F&I office. And the quicker we were, the more products the customer selected. Notice I didn’t say “sold.” That’s because selling wasn’t required under this process.

We also discovered that customers were more engaged because they felt like they were in control. Yes, they may feel like they’re in the driver’s seat, but it’s the F&I professional who guides them through the product-selection process. And by taking the menu to the customer, the dreaded F&I process, at least in their mind, was eliminated. It was just a conversation about their deal and driving habits and an opportunity to select sensibly-priced products tailored to their needs.

Since installing the iTapMenu and the process that drives it, the dealership’s average F&I profit per vehicle retailed (PVR) has jumped 40%, while products per deal have climbed more than 200%.

Skills Still Rein Supreme
I want to be clear that it wasn’t the tablet menu that drove those gains for Jack Matia Honda. It was the speed of the process and the skill — and adaptability — of the F&I and sales managers. In fact, because the process calls for the discovery interview to happen prior to the customer’s service tour — which gives the producer time to load the menu — it’s the F&I managers who are now doing the waiting.

In the summer of 2012, Chris Meacham (center) teamed up with Jack Matia Honda’s General Manager Nichael Neri and F&I Director Michelle Matia to develop a customer-friendly F&I process built around the tablet menu.
In the summer of 2012, Chris Meacham (center) teamed up with Jack Matia Honda’s General Manager Nichael Neri and F&I Director Michelle Matia to develop a customer-friendly F&I process built around the tablet menu.

The dealership still employs the proven word-tracks, menu psychology and presentation skills most good training regimens endorse. One change that seemed to increase customer engagement was having F&I managers move right to left on the menu vs. left to right. The dealership also made adjustments to product pricing. It also adopted proven presentation strategies such as “mirroring” like products in which customers show interest. And when the dust cleared, unnecessary redundancies were eliminated.

I think the biggest contributor to the success of this tablet-driven process was the dealership put customers first. Yes, the tablet did have an impact. I believe it’s because the mobile device is now the medium by which most consumers communicate, exchange information, bank and buy products. Customers are simply trained to respond to it differently than other mediums. In fact, the tablet is probably the device they used to make their car-buying decision in the first place. And from what I witnessed, the tablet made it easier for customers to make a buying decision, especially Millennials.

The tablet menu also allowed producers to sit right next to their customers while making their presentation. They were able to make changes to a customer’s deal without losing eye contact, allowing them to observe those critical nonverbal cues.

We also observed that, when a product or column is priced correctly, it was difficult for customers to say “No.” Maybe it’s because they’re used to not negotiating when using the device to purchase items on sites like iTunes or Amazon. Or maybe it’s because customers would rather buy than be sold.

The Paradigm Shift
So, yes, I do believe the tablet menu is a game-changer, but I’m well aware of the fear some dealers have of adopting this approach. In fact, I believe my evangelism cost me a partnership with a dealer last summer. His F&I team had plateaued at $900 per copy, and he wanted them to average $1,400 per copy while delivering a premium customer experience. I know my process and the iTapMenu could help him achieve both, but I believe the fear of making such a bold change prevented him from saying “Yes.”

Look, I understand there’s a lot to lose. Just about every acronym and term we use in the car business — from PVR to dollars per employee — refers to a metric 20 Group moderators, dealership consultants and vendors like me use to measure the financial success of a dealership. But I wonder if we’ve all forgotten about the one area that’s critical to a dealership’s success: the customer experience. You can chase CSI scores all day long, but are they really a reflection of the experience you deliver to customers. Focus on the experience and the money will follow.

As for my response to my inquisitive daughter’s question about whether the car-buying experience is like my Apple Store experience, my answer is, “Yes, it can be.”

Chris Meacham is the founder of Automotive Integration, a general agency based out of Westerville, Ohio. He can be reached at


  1. 1. mark Archambault [ July 13, 2015 @ 07:13PM ]

    The Apple experience is less than positive. There is an underlying arrogance and herding involved in their model. The F&I tablet model as well as any technology is merely an accelerator not the be all end all. The statement that customers seek a different experience is ridiculous. The fundamentals of F&I have never changed and are rarely mastered. The next greatest circumvention of strong fundamentals will come and go with the wind.

  2. 2. Nicole Martin [ July 22, 2015 @ 01:05PM ]

    Thank you for a well written article. Your grasp of the issues are dead on. The key factor here, is that are things that the F&I manager "has to do", like execute all the right forms and contracts so that we have a cashable, compliant deal. Then there are the things an F&I Manager "wants to do", sell products and generate profit. Customers are only going to give us so much time to do both (30-38 minutes) so we need to find a way to spend less time on the "have to'" and more time on the "want to". We (CDK) can reduce the former by having an integrated menu that doesn't require any manual or redundant entry. You mention needing 10-15 minutes to generate a menu. This should take 2-3 minutes. We just freed up at least 10 minutes that the F&I manager can use to better explain a product or overcome an objection or maybe step-sell one more product. Secondly, with our F&I laser solution, the manager can chain all the needed forms and print them quickly and silently on plain white paper. That easily saves another 5-10 minutes over loading impact forms one by one. This gives the F&I Manager nearly 20 minutes of rapport building and selling time without keeping the customer a minute extra. Win! Win!

  3. 3. Kevin Ellis [ August 15, 2015 @ 03:55PM ]

    These suggestions can work although I find that any good process needs full engagement from the G.S.M, S.M. and salespeople we all need to be working towards the same goal, making money and proper time management... I also find that when your systems are tight and the paper work arrives in the finance dept. accurately the F& I manager can be productive and quick with their work... There are NO silver bullets, or software programs that will reduce the regulation and related forms that need to be signed... We must be professional's, be congenial, explain to your client why it takes as long as it does, continue to thank them for their patience and you will find that most of people understand compliance, regulation and a busy Saturday at the car dealership, "it just takes time to buy a car"...


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