On Day Two of the F&I Conference and Expo, a panel of five tech execs convened to provide an update on how new technologies are faring in the F&I office. Billed as Round Two of last year’s spirited debate on the viability of the mobile menu, the discussion seemed to take a different turn.
This year, panelists attempted to frame their interest in ushering the F&I office into the digital age. Matt Nowicki, vice president of retail software for Innovative Aftermarket Systems (IAS) and Jim Maxim, president of MaximTrak Technologies, returned to the panel for a second year. Joining them were Kent Tomaro, CEO of OptionSoft Technologies, Allan Stejskal, vice president of sales and F&I solutions for Dealertrack, and Jeff Cobelli, director of operations for The Impact Group.
The moderator was Tom Wilson, dealer development manager for American Financial and Automotive Services (AFAS). “You may not all agree with the methods and uses of technology in the showrooms and in the business offices,” Wilson said. “But I’m sure you can all agree it takes guts, commitment and forward thinking to keep us all moving in the future.”
Panelists offered several reasons for their push to update the F&I office, the biggest one being changing customer expectations. That change, they said, is being driven by the Internet, where consumers are spending 14 hours researching their next vehicle purchase, according to R.L. Polk & Co. And what technology makers are hoping to do is level the playing field for F&I offices.
“We’re behind the customer’s expectations, no doubt about it,” said Nowicki.
The tablet menu was once again a major discussion point. The panelists agreed that the proliferation of smartphones and tablets is behind the emergence of mobile technology in the dealer space. Maxim called mobile a “game-changer” because such technologies “drive better interaction with consumers, better presentations, a more efficient process; it’s all designed to enhance the profitability but also that customer experience.”
Not everyone in the audience was convinced. F&I and Showroom’s “Mad” Marv Eleazer asked panelists to share the process they’ve wrapped around their mobile offerings, adding that he can have his paper menu printed and presented to the customer in the time it takes a tablet menu to connect to his DMS.
Nowicki admitted a mobile-menu process remains a work in progress. The reason is no one knows how the push from OEMs to take vehicle buying online will affect F&I. But if the F&I process continues to move upstream in the buying process, Nowicki believes it will be the tablet menu that will keep F&I offices in the game.
As of now, panelists said, dealerships are using the technology in a variety of ways. In July, Dealertrack released its eMenu for iPad. Stejskal said some dealers simply hand it to customers to peruse F&I products while they wait to enter the F&I office. “We’ve got guys who think [handing the iPad to customers] is absolutely crazy, and will only present to the consumer with the iPad between the two of them. But both of them are seeing big increases.”
The panel also addressed the perception that mobile tools represent a threat to the role of F&I managers. To overcome that perception, Nowicki said IAS’ approach is to pull the accounting staff, F&I managers and all decision-makers into one room to have an open dialogue before making the switch. Maxim said the main objective is to sway the F&I managers. OptionSoft’s Tomaro offered another take.
“What we find is that, if we can allow them the flexibility to have the mobile presentation without taking away their other tools, gradually, they’ll start to figure out how they can use the [mobile tools] over time,” he said.
Maxim turned philosophical when he described technology’s true promise, which is to drive better, more efficient customer interactions, presentations and processes. Panelists said existing technology is already delivering on most of those promises, but they admitted that better customer interactions will continue to be a moving target.
In response, their companies are building consumer-facing tools on top of centralized platforms that house their F&I menus, reporting tools and e-retailing solutions, allowing them enough flexibility to test new ways to deliver the F&I presentation. They acknowledge, however, that not every F&I office is taking advantage.
“Our software is nothing more than a wrench in your service department,” Tomaro explained. “We can help you put the process in. We can help you create a level of expectation that the consumer can enjoy. But we can’t turn the wrench for you.”
Maxim took it a step further, sharing results of the company’s recent study of 22,000 transactions involving his firm’s cloud-based F&I menu system. Seventy-three percent of participating dealers increased acceptance rates on service contracts by 32 percent for new cars and 33 percent for used. The average dealership, he added, increased its F&I profitability by about $450,000 per year, with lifts in profit per vehicle retailed (PVR) of $302 on new cars and $205 on used. A separate study of 350,000 transactions over a three-year period found a 45 percent lift in same-store sales.
“The technology, because it’s constantly utilized in those processes, really does make the difference because it’s repeatable, it’s sustainable, it’s something that can be counted on,” Maxim said.
Nowicki offered several examples of current tools that were slow to take off — the company’s SmartEye solution being one such example. “When we introduced SmartEye in 2001, my boss said I was crazy,” he said. The transaction-based video and audio recording system was developed at the request of a San Antonio-based dealer group. More than 155,000 recordings and 10 years later, Nowicki said, the group has achieved a consistent $300 increase in PVR.
“Separate from the PVR increase, the group also avoided countless lawsuits, has countersued dealers, and had the FBI involved in cases where customers were defrauding the dealerships,” Nowicki said.
Nowicki pointed to the company’s launch of its e-contracting initiative back in 2007 as another example. It was slow to take off and even Nowicki had his doubts about the strategy. That’s not the case today, he said.
The Impact Group’s Cobelli described a similar experience with the e-contracting capabilities equipping his company’s flagship FUSION menu. Today, he hears stories like the one involving a large dealer group in New York. Before adopting the FUSION menu, the operation was consistently seeing a 25 to 30 percent variance in service contracts processed through its prior system, which required manual data entry. Since implementing the FUSION menu, the group has reduced that variance by 10 percent.
“Who of us here today can imagine going without the Internet for a week, a month?” Cobelli asked. “We’ve come to depend on it completely. … E-rating and e-contracting are indispensable now, where it was really edgy and new not too long ago.”
The Next Wave
There is one area execs admit their companies have yet to seriously address: the Internet shopper who wants to avoid the dealership altogether. And the panel appeared divided on whether services like GoToMeeting and WebEx represent the answer to such customers.
“People not only want to do their research on the car at home, they want to complete that entire transaction online,” Cobelli said. “So leveraging those tools like GoToMeeting and WebEx can accommodate that customer’s desire without giving up the control the finance manager needs.”
But Stenjskal warned that web conferencing tools won’t quite cut it with customers who want a completely different car-shopping experience online.
“The consumer is looking for something different than what they might get from an in-store or just a WebEx presentation,” he said, noting that FinanceDriver, an online credit application that can route apps directly to the finance source, represents one of the solutions Dealertrack released to address that situation. “We’ve started to help customers to desk their own deal at some level, but still within the dealer’s control.”
Wilson closed the discussion with a simple question: “Have we outpaced the dealer?” The panels’ response was that dealers risk becoming obsolete if they don’t catch up. “Consumers are expecting this stuff today, honestly,” Nowicki said. “Inevitably, [new technology] will be adopted.”
Panelists, however, said they’re not designing their solutions in a vacuum, Nowicki noting that IAS conducts a road show every year to get feedback from agents across the country on new solutions and ideas. Similarly, OptionSoft turns to its council of 44 dealers for guidance.
Ultimately, execs said, technology is only as good as the person using it. “We can make a good F&I manager better, we can make a great F&I manager surgical,” Tomaro said, “but we’re just never going to take that bad F&I manager and make him good.”