Upselling P&A in the F&I Office

Upselling parts and accessories might not sound like a way for an F&I manager to increase profits, but it can be. How? For one, doing so increases the amount financed and therefore your participation. But there’s an even bigger reason to do so, one that involves your store’s ability to retain customers.

In no other type of dealership will you hear, “Sure sir, we can put the purchase of your new vehicle on your gold card.” And only in powersports stores will you get a question like, “Can I add my helmet and pipes to the loan?”

In automotive retail, accessories are typically included in the deal by the time it reaches F&I. This excludes items such as vehicle recovery systems, service contracts and pre-paid maintenance. However, powersports dealers are in a unique position because of their use of revolving accounts.

Another similarity between powersports and automotive retail is the disconnect between sales and F&I. Many a salesperson has been the focus of an F&I manager’s wrath because he or she has sabotaged the manager’s ability to sell his or her product. So does that mean an F&I manager should attempt to upsell parts and accessories? No, that’s not what I’m suggesting.

When you’re utilizing an installment loan, why not hand your customer a parts and accessories catalog with “wish list” stickers, and include a gift card or store credit for future purchases in the deal?

It’s the same concept as selling that pre-paid maintenance plan; get the customer to return to the dealership over and over again. That’s something a gift card or store credit can ensure more effectively than the revolving account card, because the dealership already has the customer’s money.

Between the two options, gift cards are easier to manage. Store credits require some real bookkeeping skills on your part. The drawback is that both options will cost you money.

Your credit card processor can usually set up a gift card system at the same rates you are charged for processing credit card transactions. An in-house store credit program will cost you in terms of the man-hours it takes to administer the program. This option also increases the possibility for errors, so you’ll have to do your homework to see which program suits your store’s capabilities.

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Regardless of which one you choose, both programs provide a second source of F&I income for the F&I professional. That’s because a sale of either program means you’ve effectively pre-sold those parts and accessories. As for compensation for the sale of either program, all your dealer principal needs to do is employ the same formula used for the sale of a pre-paid maintenance program.

Of course, as a F&I professional you should always inform the customer of the importance of the protection products you offer. Ultimately, however, it is the customer who chooses to buy a $1,000 worth of pipes and a $500 leather jacket instead of GAP and a service contract. You can do your best to advise the customer, but you cannot force the customer to accept the protections. However, there is no reason why you should not take full advantage of the opportunity to increase your income.

One thing you need to be mindful of is your agreements with your lenders. Aside from knowing whether a lender will even fund gift cards, you need to know what limits it places on such products. Some lenders frown on this type of transaction because they view it as a cash advance, so discretion is advised.

In today’s economy, every business needs to use every option available to maximize profits. Money left on the table in a motorcycle deal may not seem like a big deal in the short term, but add up those missed opportunities and over time you will see that you could be losing out on tens of thousands of dollars or more.

automotive consulting and training firm. He can be reached at
[email protected].