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Software & Technology

Technology Driving F&I Evolution

September 2007, F&I and Showroom - Feature

by Ron Martin - Also by this author

As I ponder how technology will bring change to the F&I office, there are several questions that come to mind. How will technology help you run your F&I department better? How will technology transform F&I? How can technology help you make your F&I department more profitable five years from now? Can technology improvements really help you sell your products better?

The flow of digital information has changed, and will continue to change the way we conduct business in the F&I department. The question is whether more technology means a more successful finance manager. That’s certainly what many F&I managers are asking as they choose whether or not to embrace today’s technology tools. Does an electronic menu make me more money? What about an electronic desking system? Does electronic contract submission increase F&I income? Will a custom reporting system make you more profitable? The answer is a resounding NO!

Technology tools don’t sell a customer anything. I can easily use a handwritten menu and be just as successful as I would if I was using an electronic menu, just as penciling the deal on our worksheets seems to be effective. The old way of sending in contracts to lenders still works and I have been using a paper F&I control log for a long time. But will this line of thinking help you get better? The answer again is NO!

I believe F&I will change more in the next five years than it has in the last 20. However, it is going to take much effort on all of our parts to get there. One of the biggest bottlenecks is the scarcity mentality of not allowing integration with the dealer management system (DMS).

Solutions Needed, But Not Required

Our economy continues to grow in spite of reasons why it shouldn’t. Why is that? I think one of the primary reasons is high productivity due to a free flow of information. The rest of the world is embracing a free flow of information while many in the automotive sector are slowing down the processes. There are many solutions that can help a dealer become and remain more profitable, but dealers choose not to use them because these solutions won’t properly integrate into their DMS. The integration problem will take care of itself eventually, as companies compete and dealers demand better sales solutions. For now, dealers will have to be content with the best possible solution, whether it integrates completely or not.

What is evident is that the F&I department of the future must embrace technological solutions if it expects to grow. There are many benefits in doing so, such as faster funding, increased cash flow, improved compliance, higher customer satisfaction and a sales team empowered by the free flow of information. All of these benefits equate to a more efficient finance department.

Still, the question remains: How do technology solutions help you sell more products?

The Move to Electronic Menus

Whether you use the menu as a presentation tool or prefer to show it to the customer at the end of the product presentation, it is a well-defined closing alternative that not only gives the customer choices but simplifies the closing process. Already, F&I profits have increased $100 per retail unit since menu selling went mainstream. It has also replaced the concept of step selling, or selling one product at a time before closing on each.

I often ask F&I managers how the menu works for them. I typically get the same reply every time: “It works well when I use it.” We usually have a nice chuckle over their answer once I repeat it back to them. The justification that they give me for not using it is they don’t always have time to prepare it. The other response I get is the menu becomes ineffective once something changes from the menu’s original setup. For example, the customer changes his or her mind about the amount of down payment here or she wants to make, making it simply impossible for the F&I manager to redo the menu while the customer is sitting in his or her office. The electronic menu solution eliminates this concern because it makes it easy to change the down payment and reprint a new one.

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