As a result of the coronavirus pandemic, the automotive industry has seen an unprecedented loss in sales over the past few months and F&I departments are facing serious challenges amidst these losses. F&I spoke with five leaders in F&I training: Rick McCormick, Reahard & Associates national account development manager; John Tabar, vice president of training at United Development Systems - Brown and Brown Dealer Services; Dwayne Wiggins, American Financial & Automotive Services’ (AFAS) FIU development manager; M. Ritchey Wheeler, vice president of training at AFAS; and Trent White, AFAS Automotive Training Academy (ATA) development manager. These experts shared their thoughts, advice, and predictions on what to do today to help prepare for tomorrow.
No rearview mirror on the F&I process. Our best days are ahead of us.
Q: What is your outlook on how business has changed and will continue to change, for dealerships, since stay-at-home orders went into effect?
McCormick: We must change our “should do” effort to a “must do”effort, now. Many have been saying we should develop an ability to conduct the F&I process remotely. Now all are saying we must do this. This crisis has also exposed the need for a seamless game plan between all departments in the dealership that focuses on how we sell a vehicle from the moment the customer lands on our website, until we deliver the vehicle. Dealerships have been hesitant to spend the resources necessary for the technology to facilitate a digital process. Now there must be a realignment of priorities to capture an apprehensive market.
Tabar: Although it is different from state to state, based on business designation, it is clear that processes have had to adapt to the limitations social distancing and stay-at-home orders have placed on dealers. The fundamental responsibilities of F&I managers have not changed though. Completing paperwork accurately, compliance, CSI, contribution to cash flow, and generating additional revenue are still our top priorities in F&I. What is different is that dealerships and F&I managers are now having to be more creative and ingenious in how those responsibilities are being met.
Wheeler: As we all know, business started changing even before the stay-at-home orders went into effect. Consumers were already starting to get deeper and deeper into the digital retailing process. They were adopting these new buying habits faster than we were implementing them. However, COVID-19 definitely accelerated the implementation rate. Dealerships are now learning, on-the-fly, how to meet consumer demand. I think that we will all be better for this in the end. We knew that digital retailing wasn’t going away and it was going to continue to get more and more popular by consumers. This has caused us to pick up the pace on being able to meet those needs.
White: I believe we have multiple mindsets within the dealerships today. We have the “this too shall pass,” the “I’m prepared for this change,” and the “now what do we do?” Our clients today are finding additional time available to research and locate the vehicle desired and may be left with empty promises to be fulfilled by the lesser-prepared dealerships. This time has escalated the need to recognize the technologies available and the need to streamline the process to accommodate the instant gratification clients may have with being able to click now and receive.
Wiggins: One of the changes that has been in our mindset regards the offsite customer. Some dealerships have engaged in digital retailing, tablet technologies, digital interviews, and other technology assistance to accommodate the offsite deal. Others have taken a “wait and see” approach, waiting until the percentages grow before looking for a solution. This event has forced everyone to embrace the offsite customer and find a solution to meet their needs.
Q: What are the biggest challenges affecting F&I managers in this new reality?
McCormick: The immediate challenge is dealing with the abrupt and sudden downturn in business. We must be more focused and intentional than before, and that requires accepting the change that has taken place and focusing on building success going forward. The ability to pivot our process to match the needs of the post-crisis customer will be critical. Customer needs will be even greater coming out of this crisis. Now is the time to provide a visual and interactive process that enables customers to see the value of products to protect them from the unexpected, and we all know now, how quickly the unexpected can hit us.
Tabar: Adapting to change is a challenge for most, no matter the situation. When you magnify the uncertainty of change to include the anxiety and worry about your health and your family’s health to the mix, it’s tough. The challenge I see for F&I is staying focused on responsibilities, and how well and fast they adapt. Understanding that in the near term, the new reality in F&I may be less deliveries than normal, means focusing on each opportunity and looking for ways to improve performance and replace income. An entrepreneurial mindset in F&I is key right now.
Wheeler: The biggest challenge when it comes to digital retail, especially when you think about customers going start to finish, is keeping F&I in the conversation. Consumers are not just going to maximize their own deal, and truly take advantage of all the protective products that we have available, without some help and guidance. That's where the F&I pro comes into play. The challenge is how to do that. We, as business managers, need to be ready to dive headfirst into the car deal as soon as we can, and control the conversation. We can't just leave it up to the sales department to button-up a deal, and bring it to us anymore. We have to get involved as early as we can, as soon as we know the customer is shopping. We can’t afford to let the customer get so deep into the process that they speed past F&I.
White: [We have to be] able to remain constant to [the] process, with both the disruption in volume and the [in]ability to visit with clients in-person. The industry has largely been made up of hands-on transactions, allowing for the business managers to be able to read body language, eye contact, and pace of the sale, while also communicating “in the moment.” Learning how to connect with a client via phone or, better yet, today’s available technology, will take a different dedication to understanding these new opportunities.
Wiggins: First, maintaining routine. Most F&I managers seem to be creatures of habit. Without their normal daily flow, it can be difficult to stay in a consistent routine. Second, adapting to new technology. Some stores embraced new technologies into the F&I process, while others waited until they were forced to act. Those that waited are trying to learn, implement, and execute all at the same time, which is difficult, even in the best of conditions.
Q: Are there any aspects of the F&I process that cannot be done digitally? If so, how should F&I managers be handling that?
McCormick: Many banks and state regulations still require wet signatures for legal documents.
So even though the F&I portion of selling products can be conducted remotely, and menus and some product forms signed, some paperwork must still be delivered to the customer for signatures. Many franchise agreements state the transaction must be delivered at the dealership. However, these agreements were written many years ago, before a digital possibility was even imagined. The process must catch up with the current reality.
Tabar: I think there is probably a way to facilitate the whole process digitally. However, I think the discovery of needs, and communicating and connecting with the customer, can sometimes be difficult in that environment.
Wheeler: There are some states that still require wet signatures on certain forms. Those obviously cannot be done digitally. However, other than those wet signatures, pretty much everything else can be done digitally. I'm not saying it can be done as well or as efficiently as if the consumer was sitting across the desk from us, but we can make it work. And we will continue to get better at it, the more often we do it.
White: There are two separate concerns when it comes to the digital process. First, there are challenges in being able to personalize the transaction to the client, with the quality time being spent in person versus the inability to connect one-on-one with email, and being able to utilize human nature responses to answers. Second, many states do not provide platforms to complete the transaction totally through digital technologies (i.e. many states still require original signatures versus being able to complete via a DocuSign or other technologies to complete the documents).
Wiggins: The 3D effect of the in-store transaction cannot be replicated digitally. We live in a 3D world, and during an in-store transaction, we are surrounded and in tune with the sights, sounds, smells, body language, and energy of the experience. The offsite transaction is 2D at best. So, the same rock-star in-person presentation will lose some of its effectiveness in a video conference or phone call. To help overcome this, consider the following: Use video conferencing instead of a phone call to get as much face time as possible. Highly personalize the conversation about protective products to ensure they see the individual impact those products provide. When using video conferencing tools, be more than a talking head in a box. Accomplish this by becoming an expert on the functionality of the site and utilizing all the presentation tools to make it as interactive as possible.
Q: Do you think these new processes and procedures will remain in place once the pandemic has come to an end?
McCormick: It is imperative that the adjustments we are currently making in our process to help customers are not viewed as a detour, but rather a part of the road forward. A certain percentage of customers will continue to want to limit exposure in a dealership setting and a remote F&I process will continue to be something we need to provide and improve on.
Tabar: I believe this has most likely accelerated the adoption of digital retail processes and procedures by dealers and F&I managers. Coming out of this, I think dealers and F&I managers will be better equipped to conduct business in a digital communication environment if that is the customer’s preference, as well as communicate with the customer face-to-face in the dealership, if that is what they prefer.
Wheeler: Absolutely they will remain in place. In fact, they were coming anyway. Depending upon who you listen to, anywhere from 1-3% of consumers were conducting their transactions entirely online. I believe that number will grow to somewhere between 10-15% before it's all said and done. Once again, all this did was accelerate the implementation rate. However, even consumers that don't go start-to-finish online, will probably do more research and get deeper into the buying process now than what they did prior to COVID-19. I think more people have been conditioned over this experience to do more from home. That’s why it’s so important for F&I to get involved and control the narrative.
White: Many of the technologies available allow for a streamlined process that caters to our clients’ desires to speed up the purchase and delivery. We have, and are learning, better processes that allow us to work smarter not harder.
Wiggins: The use of technology throughout the process will continue, especially video conferencing. I can see this tool being used to not only assist with external customers, but as a tool to communicate internally to share information within larger groups, or with absent team members.
Q: What advice would you like to give to the F&I managers reading this?
McCormick: Now is the time accelerate everything. Accelerate your efforts to grow your skills and increase your readiness to help customers see the value of your products. Use down time to invest in yourself. Accelerate training efforts, such as reading, research, and role-play, to be as sharp and ready as possible for the future increase in business. Customers will come back at previous levels, and they will need more protection than ever from unexpected expenses. Accelerate your efforts to utilize the technology you have, to make for a more efficient and comfortable process. If you accelerate during this crisis, you will accelerate out of this crisis.
Tabar: Focus on your primary responsibilities and activities that generate revenue. F&I managers need to be looking for, and developing, other revenue streams into F&I: following up with customers in F&I who enrolled in products, seeking referrals, and following up with those who chose not to enroll in products and giving it another try. Customers coming out of factory coverage, and service customers seeking to extend their ownership period, are all opportunities that you must take advantage of.
Wheeler: Business managers are now more relevant, and more important, than ever before. For many years now, we've been worried that digital retailing word take away the ability of the finance department. Some would even argue that it might take away its relevance. Well, now we are seeing the exact opposite. The business manager is showing why they are probably the most important person in the front-end of the dealership. We know that front-end compression is eroding gross profit. We also know that consumers, if left up to a questionnaire, will not take advantage of all the protective products we have to offer. Business managers need to be involved in the conversation in order to make sure consumers are aware of all the protective products we have available to help them in their ownership experience, as well as provide the dealership with desperately needed gross profit.
White: Take the time to learn all the technologies available to streamline the transaction and be able to perform on those platforms with perfection. Missing one opportunity due to lack of familiarity with tools available can, and will, cost both revenue and potential repeat and referral business. This will not go back to the way it was; it will only continue to grow.
Wiggins: For both the business managers that are still working and those that are furloughed, try to maintain your rhythm. F&I has a rhythm and flow to it, so when F&I pros get fewer turns, or no turns at all, it is easy to get a little rusty. Find someone to practice with to role play your process or video conference presentation. If you have cameras, go back and watch your game film and make notes on what you did well. Then repeat the action.
Q: Is there anything that you as a trainer, or your company, is doing to better assist F&I managers during this time?
McCormick: Reahard & Associates is providing our product videos (that can be used on dealer websites) and service contract follow-up campaigns, free of charge for the next 120 days. These are provider neutral, so they can be used with whatever brand of products they offer. The videos educate and inform the customer and feature industry experts, such as a master certified technician, explaining how vehicles are built and repaired today. This can help dealers in the current environment, where customers are spending more time on their website.
Tabar: United Development Systems and Brown and Brown Dealer Services are committing funds to help F&I managers and their families that have been displaced, or if they or a family member has been affected by COVID-19. We are also opening all of our online professional development and training, as well as real-time access to all our UDS and Brown and Brown Dealer Services associates and resources nationwide, to assist any dealer or F&I manager that may have a need. It’s been great to see this create a forum for dealers and F&I managers to share the creative and ingenious solutions they are employing to manage the current situation with each other.
White: Because we have been working on this type of selling reality for the last two or three years, we have been able to provide real time complimentary virtual training for sales, finance and service. Automotive associates have the ability to attend complimentary 30-minute virtual training sessions or small group sessions one on one with one of our seasoned professional trainers.
Wheeler: The Automotive Training Academy is holding multiple free virtual training sessions every Tuesday and Thursday. On Tuesdays we have open sessions where we pick a topic to discuss. On Thursdays we invite dealership personnel to sign up for one-on-one individual specific training. We know that we can’t coach the dealership staff as well virtually as we can when we are at the dealership. Unfortunately, we are not able to come to the dealership right now, so this is our way of doing what we can and trying to give back to the industry.
Wiggins: ATA staff put our heads together to come up with a way to help dealerships without going to the store. In April, we offered free virtual training to our industry. By visiting www.afasinc.com and sending an email, anyone in the automotive industry could join in our sessions.
Q: Is there anything else you would like to share with our readers?
McCormick: We can all agree we will get through this. The focus must be on how we spend our time during the height of the challenge and working diligently to position ourselves to help customers effectively when we are exiting on the other side. No rearview mirror on the F&I process. Our best days are ahead of us. Get ready.
Tabar: Two things. First, I know it’s tough right now, but things are going to get better, hang in there. And second, now is not the time to wait and see what will happen. Instead, be the kind of F&I manager that makes things happen.
Wheeler: I would just like to say that we will get through this. We have gone through many ups and downs in the automotive industry. And every time we do, we always come out better on the other side. Our business is full of professionals that know how to improvise, adapt, and overcome. They never back down from a challenge, and always use it as an opportunity to get bigger, faster, stronger.
White: Take this time to invest in your success and ensure that you remain open-minded to the opportunities available to connect with your clients. Practice on your peers, not your clients. Your peers won’t cost you anything. Practicing on your client may cost you both revenue and repeat or referral business.
Wiggins: I have heard the phrase “the new norm” being used in the market. Please know that this situation is not “the new norm.” Some processes, accommodations, and technology additions will stay of course, but this will pass, and we will get back to the business we know and love. Thanks for keeping the industry strong.