At any one of Bernie Moreno Companies’ 15 rooftops, customers aren’t turned over to F&I, at least not initially. Located 20 minutes southwest of Cleveland in North Olmsted, Ohio, the dealer group isn’t attempting to buck F&I tradition. It’s simply trying to prove that top CSI and solid F&I production aren’t mutually exclusive. And it’s doing so with a little tech and a lot of F&I process know-how.
Having earned a host of CSI-based accolades, customer service has never been a problem for the decade-old operation. But the group’s F&I production was far from award-winning: 2015 closed out with an F&I profit per vehicle retail (PVR) average of $937. Things didn’t get any better in January, when its per-copy average fell to $897.
The group’s executive team knew things had to change, but they first had to figure out what was behind the organization’s sagging F&I numbers. They discovered their heavy emphasis on CSI — the very thing that helped the group grow from one store to 15 in less than 10 years — was dragging down F&I.
“Stores that are CSI-focused are timid to work with the finance office, because that’s where a lot of customers get unhappy — either because of improper disclosures or the process taking too long,” says Ian Vandenbark, the group’s corporate finance director. “So a lot of [dealers] that are CSI-sensitive don’t put a lot of pressure on the finance managers to perform.”
Vandenbark joined Bernie Moreno Companies this past February, just after the group’s former COO, Andy Ham, proposed a plan to institute a new F&I process that would be driven by tablet menu technology. The soon-to-be general manager of the group’s Infiniti store in Coral Gables, Fla., figured the tablets would limit the time customers spend in the F&I office. But to ensure the process delivered improved F&I production, the executives knew they needed a classically trained F&I professional to make it all work.
The group’s search led to Vandenbark. And after months of training and weeks implementing his new process, the F&I pro had Bernie Moreno’s F&I operations averaging $1,222 per copy in June. He admits, however, that there’s nothing unique about the process he devised. Having trained under well-established companies like JM&A and First Dealer Resources during his nearly 20-year industry career, Vandenbark says he molded his process around what he felt would work in his F&I offices.
“In the finance industry, nobody is an originator of any idea. You just take a lot of ideas that you’ve been exposed to throughout your career and kind of pile them all together to create the process you think is the best way to go,” he says. “When you look at the entire process when it’s all spelled out, it’s a little bit of this, a little bit of that.”
Cleveland’s Celebrity Dealer
In dealer years, the group’s president, Bernie Moreno, is still a young pup, but he has accomplished a lot in a short amount of time. He opened his first dealership, a Mercedes-Benz store, 11 years ago in North Olmsted. It was selling 200 units a month when he took over. The store now sells well north of that average.
Last year, the group collected its 10th Mercedes-Benz “Best of the Best” award, which honors the top 20% of Mercedes-Benz dealers in the country for superior performance in sales, service, parts, operations, and customer service. But this level of success hasn’t been limited to just that store.
The Mercedes-Benz dealership the group built in Fort Mitchell, Ky., received the same award in its first two years of operation. There’s also the Mercedes-Benz store in Burlington, Mass., which won the award in 2015 — its first year in business.
“He runs a solid operation,” Vandenbark says. “We have three Mercedes dealerships, two Nissan, soon-to-be four Infiniti stores, Volkswagen, Acura, Mini, Porsche and a Motorsports Collection. He’s grown into a pretty large operation, and he’s done it in 10 years.”
Moreno has also become somewhat of a local celebrity, having established relationships with the who’s who in northern Ohio, including members of the reigning NBA champion Cleveland Cavaliers and the MLB’s Cleveland Indians. In fact, 19 of the group’s vehicles were used to carry players during the Cavaliers’ championship parade on June 22.
“When those athletes or anyone that has to do with those sports are looking for a vehicle, they typically gravitate toward Bernie’s stores before any of the others,” Vandenbark says. “And all of those people have a big network of similar clientele, so I think that’s why his highline stores do so well.”
The group’s quick growth, however, has not come without some growing pains. “When you’re set up to run four dealerships and you buy so many in such a short amount of time, it creates a pretty large administrative issue,” Vandenbark adds. “That’s kind of how my position came to be. Without it, things would get a little chaotic.”
Vandenbark had his work cut out for him, as Moreno agreed to invest more than $30,000 to arm the group’s 25-plus F&I producers with Apple iPad Pros equipped with Dealertrack’s eMenu technology. The idea was to move only the sales portion of the F&I process to the sales desk. And by eliminating the physical T.O. to F&I, the group thought customers might be more open to the F&I pitch.
“Not many dealers are out there doing menus at the sales desk, and not many dealers are using iPads to do it,” Vandenbark says. “We decided that’s the best way to do it, because that’s where the customer is most comfortable — at the sales desk.”
Customers who enter the dealership are guided through a standard sales process: The salesperson greets the customer, escorts him or her around the lot, and then takes the customer on a test drive once he or she lands on a vehicle. Once there’s a commitment, it’s the sales manager, not the F&I manager, who sets the finance terms — that’s unless a business manager is free or the customer’s credit doesn’t qualify for the standard programs.
“Usually, the terms will be spelled out by the sales manager: ‘We’re going to sell the car for $30,000, we quoted a 60-month payment at 3.99%, the customer said ‘Yes’ to that payment with zero cash down,’” Vandenbark explains. “Once we’re getting ready for that deal to go to the finance office, that’s when we let finance know, ‘Hey you got a deal, the sales manager has the deal jacket.’ And that’s when finance goes out to the sales desk to do a customer interview.”
Guiding the interview is the survey tool equipping Dealertrack’s eMenu technology. Once completed, the F&I producer tells the customer he or she will return in 10 minutes. Setting that timeline and sticking to it is critical to keeping customers satisfied, Vandenbark says, noting that the F&I manager uses that time to prep his or her office and menu.
One of the major differences in Vandenbark’s tablet-driven process is revealed once the F&I producer returns to the sales desk to present the menu: The salesperson remains with the customer throughout the entire pitch. “[The salespeople] provide some interesting insight. A lot of times, with as much rapport as they have with the customer, the customer will lean in to ask them for their opinions,” Vandenbark says.
Once products are selected, the F&I manager escorts the customer back into the finance office to complete the disclosures and signing portion of the process. This step also gives the F&I manager a second chance to sell products the customer may have rejected. The in-office portion, Vandenbark notes, takes between 10 and 25 minutes.
Changing the Approach
While the plan sounds simple enough, executing it successfully required a lot more than iPad training. Vandenbark had to change the mindset of his producers to match his consultative approach. So he gathered his producers together, asked them to clear their offices of all sales materials, and told them they needed to stop thinking like salespeople.
“What we want you to do instead is do a quality customer interview like everybody else in the industry does,” he told them. “But during this interview, the questions you’re asking are going to be a little more consultative.”
To hammer home his point, he asked the group to identify who they thought were the best salespeople and why. Their answers ranged from attorneys to the guys on Wall Street, but the answer Vandenbark was looking for was doctors. As he explains, doctors ask questions, listen to their patients’ answers, then prescribe options from which their patients can choose, whether it’s a prescription, therapy or a medical procedure. And that’s exactly what he wanted his F&I producers to do; present all options, then explain which ones may or may not fit the customer’s needs based on what was learned during the interview.
“We’re not offering things that we know you don’t need. We’re not offering GAP on a lease, not offering service contracts on leases if it doesn’t make sense,” Vandenbark says. “That’s part of taking a consultative approach instead of the present/defend approach.”
To go with his new philosophy, Vandenbark changed the titles of his producers from finance managers to business managers. The former, he says, was too closely associated with the finance office. But the change was also designed to eliminate another problem the group was having: salespeople tipping off customers to the pitch that awaited them in the F&I office.
“That’s what [consumers are] dreading, yet that’s how many people introduce the finance manager,” Vandenbark says. “So Bernie Moreno dealerships stopped doing that. We only ask [salespeople to] build up our finance department as a credible authority. We want our customers to look forward to meeting somebody who’s somebody in the industry.”
The only products salespeople are trained to present are LoJack’s vehicle-recovery system and DuPont’s appearance package, both of which are preloaded on every vehicle. If the customer agrees to purchase either product, the salesperson is paid $50.
A Work in Progress
While Vandenbark’s process has reduced the time customers spend in the F&I office, it hasn’t yielded a significant savings in terms of time spent with his business managers. But the process is designed to keep customers active and engaged, so it at least appears to take less time. And if business managers are backed up on a busy Saturday, Vandenbark says customers are taken on a tour of the dealership. They’re also constantly updated on where they are at in the process.
So far, customer surveys prove the process is working. “We hear a lot of, ‘This is the best experience I’ve ever had. We were here two hours, but didn’t seem like that,’ especially in the last couple of weeks,” says Rob Ashurst, a business manager at the group’s North Olmsted Mercedes-Benz store, where the process has yielded solid F&I production despite the fact that leasing accounts for 70% of sales.
LoJack, Ashurst says, is one of the more popular products, as are tire-and-wheel protection, paintless dent repair, windshield protection, key replacement and the DuPont product.
“We go through and we treat a lease just like we would any other deal,” he says, noting that service contracts are only offered on leases if the customer indicates during the interview that he or she plans to purchase the vehicle when the lease expires. “Obviously, it’s different, and we’re not offering things that only a retail client would be buying or purchasing. We’re going through what makes sense for that particular client for that particular lease.”
The business manager, however, admits the transition to the new process has not been without its difficulties. Some business managers were reluctant to introduce a tablet into their sales process, while some salespeople were hesitant about having business managers conduct their sales process at their desk. The tablet technology also created technical issues Dealertrack technicians had to correct.
“The biggest issue is getting the salesperson onboard, because they’ve always been trained that, when the time comes, they walk their client over to finance,” Ashurst notes. “But they’re starting to get those surveys back, and they’re starting to see how this really does speed up the process, makes it more efficient and saves them time.
“It also gives them more time between clients, and it gives us the ability to give that client an experience they’ll remember, instead of just sitting there waiting for finance,” the business manager added.
Ricardo Rodriguez, a business manager for one of the group’s Nissan stores, admits the change was a little uncomfortable at first. “We’re creatures of habit, and when we’ve been doing something for so long, it’s weird and uncomfortable [to do something different],” he says, adding that service contracts, the Nissan Ultimate Platinum Protection Plan, and GAP are the top sellers at his finance-heavy Nissan store.
“But then you start seeing the reaction of the customers and how they really enjoy it,” he adds. “The ball is in their court and the pressure goes down so much, at least more than what I’m used to.”
Vandenbark is confident his process will continue to deliver a boost in F&I production. When he first joined the company, management gave him a goal of $1,300 per copy. Four months in and the company is almost there. But he knows the bar will be raised even higher once he does.
“The industry is constantly changing, and if you’re not moving with the industry and changing with it, you’re being left behind,” he says. “That’s what we’re trying to do; we’re trying to change with the industry. The customer is saying we don’t like to go to finance and get beaten up. So we’re making sure that our finance staff is not going to beat our customers up, and we’re going to go to the customers where they’re most comfortable.”