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The Evolution of the Front-End

January 2010, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

With so many industry insiders and experts weighing in on how the Great Recession has changed the dealer business, the magazine sat down with Ron Martin for a one-on-one discussion about what all the chatter really means. Read on to learn what the president of The Vision of F&I and VisionMenu has to say about the industry’s biggest threat and why a more customer-friendly selling system could be the answer. 

FI: Ron, you’ve often talked about the need for dealers to adopt a more customer-friendly selling system. Can you define what that is?

RM: I recently saw an Ally Bank commercial that reminded me of how some dealers sell units and F&I products to their customers. In the commercial, a gentleman is sitting with two school-aged girls. He asks the first girl if she wants a pony. She answers “Yes,” and he hands her a toy pony. He asks the second girl the same question and she also says “Yes.” However, rather than handing her a toy pony, he brings out a real pony. When the first little girl sees the second girl’s pony, she tells the man, “You didn’t say I could have a real pony!” The gentleman replies, “You didn’t ask.”

Unfortunately, that’s how many front-end departments operate these days. They either withhold the payments until the customer gets to the F&I office or they give the customer the payment and hope they won’t ask what the price is.

This withholding of information — as even the little girl in the bank commercial knew — isn’t good business. When customers have to continue probing to get all the information they need to make an informed decision, dealers are not building trust. Give them the information upfront and allow customers to focus on the decision.

FI: I recently wrote a story on inventory management, and several of the sources I quoted said the Internet has really changed the game for that part of the business. The reason, they said, is because it’s brought transparency. Is that what you mean in your call for more transparency?

RM: Not only is transparency important, I believe our long-term existence is predicated on it. For example, I recently had a conversation with a dealer in a small town that echoed what your sources said. Using the Internet, a customer can search a 100-mile radius and look for the best price. This dealer even had a few customers who were willing to drive 100 miles just to save $300.

Obviously, that situation has worked to his advantage, but the point I’m making is, even small-town dealers are affected by the ease of the Internet. Customers can now find all the information they want, and that’s not going to stop anytime soon. So, if we aren’t transparent, we could easily be replaced as the distribution point for bank and auto loans.

FI: Can you describe what transparency means for the salesperson, the desking manager and the F&I manager?

RM: For the salesperson, it’s sharing all pricing and payment information with the customer. That doesn’t mean you need to promise an “A”-tier interest rate before you know they’ll qualify. Until the customer’s credit information is received, I recommend the salesperson present the customer with a list of financing, cash and leasing options based on an average interest rate.

For the desk manager, it’s empowering the sales staff with the information they need to make the process transparent to the customer. It also requires an evaluation of the customer’s trade-in with information to back up their appraisal. For the F&I manager, it’s describing all of the benefits available to the customer, then closing them on package options or individual product options.

FI: What role does technology play in bringing this about?

RM: It plays a crucial role. Providing the customer with options requires that sales and F&I execute those options on the fly. Not only can technology facilitate this by allowing a dealer to present multiple payment options, but it can also ensure that the information is accurate and presentable. And that’s important, because a customer is not going to put much validity in information if the forms you hand them are handwritten. And from a compliance perspective, a dealer can only be sure that the right information was presented when the software dictates what information is presented.

FI: Earlier this year, sources told me the recession could do what technology providers have been trying to do for years: Get dealers to embrace technology. Have you seen this play out?

RM: The Great Recession brought the pain we needed to get everyone to focus on changes to grow our economy. And this is occurring in all parts of the economy, the latest being healthcare and job creation. In the case of automotive, the recession has brought about changes with respect to what vehicles are being built and how they are being distributed.

And yes, the Great Recession has even affected us in the F&I industry. Financing is a key component of the decision-making process for the consumer. I think we are seeing the need for a low-cost, high-quality sales process for the consumer. I think that means simplifying technology tools, cutting back on unnecessary features and focusing on what the dealer needs to do to sell more units, accessories, aftermarket and F&I products.

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