F&I and Showroom magazine asked the individuals collectively leading more than 15 sessions slated for this year’s F&I Conference and Expo about the Consumer Financial Protection Bureau (CFPB), today’s Internet customer and tablet menus. They also offered their opinions on where most F&I processes go wrong.
President
Team One Group
“Using Disclosure to Your Advantage,” Wednesday, Sept. 18, at 9:10 a.m.
F&I: Where do most F&I departments go wrong while working with a customer?
Angus: With us, it’s all about process. And our process is the result of research and trial and error over the last 20 years. For example, we do not conduct interviews. The key factor in F&I success is to install and maintain a process that is in compliance, produces top customer satisfaction scores and delivers top income results.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Angus: The dealers that rely too heavily on finance reserve will be the big losers. However, we have been working with our agents and dealers to change their focus to products rather than reserve to minimize the effect of lost revenue. Frankly, our top performers don’t stand to be hurt very much because the overwhelming majority of their income already comes from product sales.
F&I: What’s your take on tablet menus?
Angus: We have been working with the major players in this area, and while electronic devices may become a more important part of the F&I process, they are not there yet. How they will be used in the future will probably be much different than the way they are used now.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Angus: The relationship between sales and F&I differs greatly from one dealer to the next. In our development, we ask very little from the sales department other than that they sell the car and provide a proper turnover to F&I. That makes developing the process much easier.
Director of F&I Training
American Financial and Automotive Services Inc.
“Stump the Pro,” Tuesday, Sept. 17, at 10:30 a.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Dupaquier: As a department, they go wrong by not establishing a consistent ongoing process that they stick to.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Dupaquier: For the most part, the dealers who are not compliant do not realize they are out of compliance. But overall, the increased scrutiny from the federal level should not be of any concern to the dealerships.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Dupaquier: I do believe the way dealerships are compensated for loan origination will change shortly. However, I do believe that the finance companies will do their best to fairly compensate the dealerships, which may increase profitability.
F&I: What’s your take on tablet menus?
Dupaquier: My personal opinion has not changed since this topic was discussed at last year’s conference. I have always believed that we should embrace technology and move forward with it. However, I do disagree with how many of the mobile menus are making it easy for a dealership to eliminate the business manager’s job function.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Dupaquier: We have pioneered processes that integrate business managers with the Internet department. Some of the largest Internet departments in the United States are working our process.
Vice President of Training and Strategic Deployment
Allstate Dealer Services
“A Trainer’s Take,” Wednesday, Sept. 18, at 11 a.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Chafetz: From our perspective, most F&I managers unwittingly make their jobs more difficult by talking at their customers. This is the perfect recipe for “commission breath.” Once the customer believes your actions are motivated by purely selfish motives, they will naturally push back.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Chafetz: A fair share of dealers have had an “I’ll take my chances” attitude with the current regulations. Today, that simply won’t fly. It appears that the CFPB will step in on any consumer finance transaction they deem potentially unfair. Items such as access to credit, costs of credit, presentation material and sales presentation wording, and potentially predatory product pricing may all become targets for the CFPB.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Chafetz: The loss of reserve income has been discussed for more than 15 years, but I believe now it’s on its last legs. Dealers may soon discover that the cost to defend their F&I practices may be greater than the income rate markups generate. Once the first lender moves to flat commissions, the rest will follow. To prepare, dealers need to make sure their F&I managers are well rounded, informed and, most importantly, effective. If reserve dollars drop, product sales will need to rise. Note I said product sales, not product gross profits.
F&I: What’s your take on tablet menus?
Chafetz: Mobile technology may be appealing to a certain segment of the buying public, but, in my opinion, it’s the belly to belly connection between the customer and the F&I manager that will make or break the transaction. Menus are tools designed to enhance the F&I manager, not the other way around.
Vice President of Sales and Income Development
Safe-Guard Products International
“Master the Menu,” Tuesday, Sept. 17, at 3 p.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Garcia: The No. 1 problem I encounter day after day is the failure of F&I to work under a combined effort with the sales team. In many dealerships, these two departments work completely independently of one another and in doing so, lose countless sales and reinforcement opportunities.
My training stresses the importance of bringing the F&I and sales teams together. I have had the privilege of working with hundreds of dealers across the country, and the recurring commonality among the most successful is that the F&I and sales teams operate under a combined and harmonious effort.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Garcia: Unfortunately, I feel most dealers are not ready. Dealers have historically taken more of a reactionary approach to these types of changes; however, one of my ongoing training goals is to help dealers become more proactive so that they are ahead of the game.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
[PAGEBREAK]
Garcia: The tightening up of dealer participation has been a topic of conversation for many years, yet very few have adequately prepared for the complete loss of that income. Dealers who heavily depend on this profit center and who are not taking action to prepare for the changes may soon experience a sobering new reality. My job is to help dealers overcome this dependency and to maximize more sustainable means of income development.
F&I: What’s your take on tablet menus?
Garcia: Quite a number of F&I managers have gravitated toward the mobile menu and have found it to be a good fit for them. I believe, however, that a well-trained and naturally talented F&I manager can be just as successful without it. At the end of the day, all dealers should be using some type of menu. If mobile technology helps to get the menu in front of more buyers across the industry, then everyone wins.
Director of Training
UDS
“Raiders of the Lost Profit,” Tuesday, Sept. 17, at 2 p.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Gould: The most common obstacle we see during in-dealership training is the unwillingness of F&I managers to get involved in deals while they’re developing, as well as meeting customers out in the showroom. All too often we see F&I managers undermine their potential by creating unnecessary customer resistance when they sit in their office waiting for things to happen rather than getting off their “axle” to make things happen.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Gould: For the most part, dealers are ready for the watchdogs, as there are only a few who don’t adhere to strict guidelines regarding proper disclosure and documentation. The greatest room for improvement would be in training. Though most dealerships have safeguards in place, many of them have employees who are not quite at 100 percent in terms of compliance.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Gould: We believe the spreads as we know them will change. And we believe flats or a percentage of the amount financed will soon be the norm. Here at UDS, we have always looked at rate as a bonus and that product drives profit. Therefore, we can say we’ve always been prepared for rate to diminish.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Gould: The problem is, all too often, the Internet department is empowered far too much in terms of taking a deal from A to Z. And unfortunately, they don’t get F&I involved until it’s too late. On the other hand, F&I managers need to realize that a lot of the burden rests on their shoulders to get involved early and often on Internet-generated deals. F&I managers need to form an alliance with the Internet department through constant communication and positive reinforcement.
Director of Training
GSFSGroup Training
“A Trainer’s Take,” Wednesday, Sept. 18, at 11 a.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Jennings: We take a different approach when looking at F&I departments. We analyze what they’re doing and discuss what areas they want to improve. We know that everything starts with the salesperson and how well he or she transfers the customer to F&I. The trust he or she has established sets the tone for the F&I experience.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Jennings: We believe that dealers have come a long way when it comes to compliance, and we constantly update our materials to better inform our dealers.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Jennings: The F&I department will still be a good profit source for dealerships. We have been proactive in helping our dealers sell more product versus achieving deal profitability through reserve. We’re really focused on minimizing those losses to the dealer and, at the same time, driving dealer retention through proper training.
F&I: What’s your take on tablet menus?
Jennings: We’re a huge believer in technology and how it can enhance the customer experience through the entire automobile purchase. We will continue to embrace technology that enhances the purchase experience, as well as work closely with our dealers to implement processes that are centered on the customer.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Jennings: We believe Internet departments are working better with the F&I office. Our focus is to get the entire dealership to work as a team. Some of the best practices we’ve seen F&I managers employ to convert leads into sales is to give multiple options based on the customer’s driving habits.
National Training Director
Warrantech/AMT Warranty
“A Trainer’s Take,” Wednesday, Sept. 18, at 11 a.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Lovin: Most finance departments go wrong because they don’t have an organized system for handling customers. It doesn’t matter what system you employ; just have one and follow it. A good system should include the following: greet the customer immediately upon receiving the deal jacket and conduct the discovery interview at the salesperson’s desk; present 100 percent of the customers 100 percent of the products 100 percent of the time; and create a financial package that fits the customer’s needs.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Lovin: The most successful dealers I have worked with are also the most compliant. They present all products to all customers, give full disclosure on the finance contracts and their CSI scores are above factory standards.
Compliance and performance are not mutually exclusive. What I have found is that performance increases the more a dealership becomes compliant.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Lovin: It is possible that dealers could lose dealer participation, but I don’t think it will have that much of an impact. The banks will compete for business by increasing their flats. Rate brings nothing of value to the customer. It’s the No. 1 reason customers refinance their loans. Dealers need to focus on selling products of value to their customers so if participation goes away, they will be prepared for it.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Lovin: Internet departments are going to continue to grow in dealerships. How you manage the Internet department is the issue. If normal retail operations are at $1,200 PVR and the Internet department is at $600 PVR, there is a problem. The most successful dealerships treat Internet managers like sales managers, and they are held to the same standards. One hundred percent turnover to finance at the point of sale is expected and finance performance is part of the Internet manager’s pay plan.
National Account Development Manager
Reahard & Associates Inc
“Think Like a Customer,” Wednesday, Sept. 18, at 9:10 a.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
McCormick: The mantra in F&I for far too long has been to think like a car person and do what’s best for the dealership. When F&I managers think like a customer and craft the sales process around their customers’ needs, profits will soar. Too many F&I departments are concerned with using the best menu or utilizing the newest technology; none of that matters if customers don’t like it. Give them a customer-centric experience and they will buy.
[PAGEBREAK]
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
McCormick: Most dealers are committed to total compliance with all regulations. They are good at gathering information regarding a new regulation, but they tend to fail in the implementation. It is imperative that dealers establish written guidelines for each step of the sales process and verify they are being used consistently. A written code of conduct should be used to set expectations for both the sales and F&I departments.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
McCormick: I don’t think we’ll lose dealer participation, but dealers do need to adjust their process to prepare for whatever changes are coming. We are already seeing lenders demand a more transparent process for customers, which is great. Everyone wins when we do that. Customers still need us and most customers benefit from our advocacy on their behalf.
F&I: What’s your take on tablet menus?
McCormick: Steve Jobs was quoted as saying Abraham Lincoln did just fine without technology. He also once said, “Precedent shows that we can turn out very uninteresting human beings with technology.” In my opinion, technology, such as mobile F&I menus, will become more of an influence in the F&I process as we move forward. The key is to have well-trained professionals who know how to use it effectively, coupled with a process that raises the level of engagement with the customer.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
McCormick: Many Internet departments are only focused and compensated on “show-up appointments” and actual sales. With the growing number of sales that are totally Internet based, the opportunity to help those customers with the F&I products available must become a priority. F&I managers should be involved in training of the Internet department, and the Internet department should be compensated for F&I profits.
Cory Mosley
Principal
Mosley Automotive Training LLC
“Profiling Gen Y,” Tuesday, Sept. 17 at 4:30 p.m.
F&I: Why should dealerships be making adjustments in process and approach to accommodate the Gen Y buyer when studies show they don’t have much buying power?
Mosley: Well I suppose it comes down to which studies you read. Think about it. At one time, cigarettes were advertised with doctors saying smoking was good for you.
The data I’m reviewing shows Gen Y is influencing 50 percent of purchase decisions in a household and will account for 40 percent of the customer base within the next five years. To me, it’s adapt or die.
F&I: You work with a lot of Internet departments. Is there a role for the F&I office in terms of helping to capture and convert leads into sales?
Mosley: Customers want a great price, great rates and low lease payments. They want maintenance-free cars, and they want confidence that they’re in good hands financially at the dealership. All of that falls under F&I engagement.
F&I: Why does there seem to always be a divide between sales and F&I?
Mosley: It can be territorial just like sales and service departments in dealerships. General arguments arise in those little “moving profit from the front to the back” transactions that create hostility within sales departments. Also, sales can feel like F&I moves too slow, while F&I feels like sales doesn’t care about what happens after the customer commits to a deal. I think communicating better and having a goal alignment conversation with leadership will help set better rules for engagement and achieving better cohesiveness in the dealership.
F&I: Are you a fan of the mobile F&I menu?
Mosley: I am in favor of most, if not all, customer-centric processes that make a dealer more efficient and improve the customer experience. Different products have different quirks to them, but the industry needs to be using technology to accelerate forward.
F&I: How do you feel about dealers combining sales and F&I?
Mosley: I have seen that, mostly in a highline environment. My concern is always around gross control and the effort that goes into getting every last dime to which the dealership is entitled. A lot of times, success or failure rests on how payplans are created and executed at the dealership. Expect your salespeople to work their payplans to their benefit, whatever that may mean.
President
Reahard & Associates Inc.
“Crank Up the Value of F&I,” Tuesday, Sept. 17, at 2 p.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Reahard: In my experience, too many F&I managers still think their job is to sell products, rather than to help customers. As a result, they focus on making product presentations rather than on how a particular product will help a particular person. Almost every customer objection to every product boils down to, “Why do I need it?” If you can’t tell them why they do, they’re not going to buy it.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Reahard: The vast majority of dealers strive to ensure they comply with all the laws that impact F&I. Every dealer should adopt written policies with regard to spot deliveries, payment quotes, F&I product mark-ups, job descriptions and use of an F&I menu. They also need a written code of conduct, and F&I must be a checks and balance system for the sales department.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Reahard: While dealer participation may change, I don’t see this revenue stream being eliminated any time soon. We may see larger flats or a percentage of the amount of advance, but dealers will continue to be compensated for their services.
F&I: What’s your take on tablet menus?
Reahard: Simply handing a customer a menu in any form and then expecting they will magically buy products doesn’t work in the real world. The key is incorporating it into a needs-based F&I sales process that is designed to capitalize on its unique capabilities. I have yet to see a complete mobile F&I sales process that does this.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Reahard: With the ever increasing number of Internet customers, developing and implementing a written dealership process for when and how F&I is involved is absolutely essential. A clear understanding of each department’s responsibilities, constant communication between the two departments, and making F&I income a significant part of the Internet department’s compensation is key to maximizing cooperation, sales and profits.
National Sales Director and Director of Training
United Car Care
“Logical Conversational Selling,” Tuesday, Sept. 17, at 3 p.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Vecchioni: A proper and profitable finance department has to run on knowing where the business comes from and how to treat the business when it presents itself. There can‘t be conflict between finance and sales and sales management. Finance wants “leg” on a deal structure, the sales manager wants miracles on challenged credit and salespeople just want a deal. Everyone has to work in conjunction to give the customer the penultimate car buying experience. Today’s sale should be just the beginning of a lifelong customer relationship.
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
[PAGEBREAK]
Vecchioni: Regardless of the goal of educating their employees, dealers still seem to have a lax attitude in areas of privacy. Too often, the salespeople are informed of the customer finance profile. Regulation Z is violated every day, everywhere, and it is violated innocently by salespeople and Internet sales.
And when asked about rate or payment, salespeople give ballpark answers based on past experiences of what they’ve witnessed. The term “extended warranty” is used much too often. In order to become totally compliant in the business, a culture has to be developed and adhered to. It’s not enough to just give the regulations to staff and explain the penalties.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Vecchioni: More than likely the lenders who do business in this industry will move to flat fees for placing financing. I advise dealers to make sure that no more than 35 percent of the income from the finance department is from reserves. My recommendation to dealers is to make sure their finance office is product strong and reserve consistent. Floating interest rates differently on like customers is a prescription for class action suits.
F&I: What’s your take on tablet menus?
Vecchioni: Menus don’t sell, people do. Presenting product from the menu simply enables the finance office to be compliant in as much as making sure that every customer is offered every product. Menus also offer efficiency to the finance manager in their presentation, which saves time.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Vecchioni: A commitment must be made that all transactions go through the finance office. Internet departments get too involved in finance details and not involved enough in features and benefits of the vehicle in question. Their job is to get customers committed to the vehicle, and turn over the finance questions and ultimately the paperwork to the finance manager. Internet departments are not equipped to answer finance or finance product questions. If we want them to do this, then we need to train them on sales and F&I.
Training Director
Great Lakes Companies
“A Trainer’s Take,” Wednesday, Sept. 18, at 11 a.m.
F&I: Where do you see most F&I departments going wrong while working with a customer?
Veldkamp: Where most F&I departments go wrong is they simply forget to present the need for the product. Countless sales are lost because the F&I manager simply did not state, “Your car may break down after the factory warranty expires. With today’s complex vehicles, the cost of repairs can be very expensive. A vehicle service contract is a great way to budget for those repairs.”
F&I: Do you think dealers are ready in terms of their compliance procedures for increased scrutiny?
Veldkamp: Most dealers want to do business the right way. The challenge for the small dealership becomes trying to understand why the way they’ve always done business may no longer be compliant in today’s environment. Many dealerships need to improve by simply developing written processes and procedures that are followed with a zero-tolerance policy.
F&I: Do you think dealerships are prepared to lose dealer participation as a profit source if the CFPB has its way?
Veldkamp: I believe that reserve, as we know it, is going away. I believe it will be replaced with a flat fee structure. As with most things in sales, I believe in the 80/20 rule: Twenty percent of the dealers are taking a proactive approach and are ready, 80 percent are taking a wait-and-see attitude.
F&I: What’s your take on tablet menus?
Veldkamp: I would rather see an F&I manager who truly understands how to present the menu effectively use a paper menu than an untrained F&I manager use a mobile menu that promises a quick fix. It’s not the platform the menu is on; it’s the presenter behind it.
F&I: Can you offer any advice on how the F&I office can better engage sales and the Internet sales department?
Veldkamp: If F&I offices are to be successful in the future, they need to embrace their Internet department. Statistics show that more than 90 percent of customers begin their new-vehicle purchase online. There needs to be an open line of communication between the Internet department and the F&I office, along with a written “Internet Customer” F&I process to ensure that every deal is maximized.
media brand
0 Comments
See all comments