Because I’ve been living in a cave for the last few years due to evolving work responsibilities, I seem to have missed out on much of the spirited debate about the role (if any) and usefulness (or wastefulness) of the customer interview.
But since my paycheck comes from a subprime auto finance company and hasn’t bounced yet, I’m duty-bound to sidestep the plain vanilla F&I fracas for a moment and make an important distinction between that interview and the special finance interview.
Setting a customer up for the F&I menu is not the central objective of the special finance interview. Yes, back-end product is an important consideration of the SpiFi interview, and some of those profit-bolstering products in particular can in fact deliver considerable value for this customer. But the F&I pitch is not the primary purpose.
Regardless of whether your dealership systematically interviews every customer, if you’re serious about subprime — truly serious, not just "Darned captive didn’t buy it so, uh, DealerTrack it out to a bunch of those big-fee banks and see where it sticks" serious — you should be interviewing every single credit-challenged customer, period.
Several years ago, I detailed the key components and benefits of the special finance customer interview in a series titled, "The Customer Interview: A Small Initial Investment that Yields Big Dividends." Many aspects of our business have changed since then, some of them dramatically. The principles of this customer interview, however, have not. Borrowing heavily from that ancient parchment (the sincerest form of self-flattery), I’ll summarize five of the keys to an effective subprime customer interview here:
1. Prepare yourself for the interview by having a thorough knowledge of your financing sources and taking a few moments to complete a preliminary review of the customer’s application and credit report.
2. Orient the customer to what the financing process entails, what it will accomplish, and how long it will take.
3. Validate the application with the customer line-by-line to confirm its completeness and accuracy.
4. Review credit reports with customers (again, line-by-line) to learn the story behind the data, and to give them a clear understanding of how their past actions will affect their present options.
5. Prepare your customers for the sale and close based on what will now be your complete understanding of income, credit, vehicle needs, down payment and trade equity.
"Ugh!" you say. "Why suffer through such old-school drudgery when a single click will shotgun each of my apps out to a bazillion paper-hungry lenders, and I can get back to my fantasy football roster?"
Glad you asked.
A thorough and properly performed customer interview will smooth the transaction. It will load you with all the information you need about what your customers’ primary selling drivers are and what their objections may be (e.g., rate, trade, payment, vehicle, down payment, bad previous experience, or any number of other items you may not have considered).
It also will build your customers’ confidence both in you as the finance expert and in the proven process that you manage so successfully. Better yet, they’ll be more likely to enjoy the ride and stay on board until the destination is reached.
The customer interview also will get you the most robust, unwind-resistant and quickly fundable call from the best lender the first time — all of which will help you to land the customer on the best car the first time. This, in turn, will help you to maximize gross, because you’ll do better on the vehicle itself and be in a better position to sell F&I products.
As I noted in that original series, I’ve been fortunate to work with some of the industry’s top special finance managers and trainers, and have found the customer interview to be a common thread in their consistent success. While each of them may go about it somewhat differently, they all swear by the interview as being essential to a profitable special finance business.
So I’ll stay out of the discussion as to whether the customer interview is the panacea for what ails any given F&I office in the country. But unless you’re selling Maybachs and Bentleys, a quarter or more of your customers today have sub-600 scores. If you’re still not interviewing every one of them, it’s time to come out of the cave.
Aaron Dalton is senior vice president of structured finance and business development at Prestige Financial. E-mail him at [email protected].