These are fast-changing times for dealerships. Profit margins in recent years have evolved from a model that generates a profit from selling cars to profitability from F&I sales, financing, incentives, and customer retention through the service drive. An industry that once roared with only steadfast brick-and-mortar stores has evolved to include innovative customer experiences and streamlined, easy, minimal-contact purchases.
Executing on F&I Products
One thing that remains consistent even in changing times is that dealerships that use resources efficiently and effectively, and execute on sound F&I strategies, always come out ahead. Dealerships that are focused on aftermarket product sales not only survive but prosper. An effective strategy is of paramount importance, as dealerships need to deliver value with the products they offer to customers, and a win-win situation is afforded by products that benefit the customer and help develop a relationship with the dealership and its service department. It is certainly the best way to make them a customer for life by making their service visits delightful when something goes wrong and it’s covered by a small copay.
A dealership will always reap significant benefits by converting a car sale into new customers for their service department. A knowledgeable, skilled sales representative who presents quality aftermarket products through F&I to a customer is the single most important factor in gaining that conversion. Sales needs to be able to start the F&I conversation earlier in the process. Further, they also need to have a good understanding of the products and a flow for transference to the F&I specialist. It simply cannot be stressed enough that training is a vital part of successful sales. Knowledge truly is power, and being prepared and able to educate today’s savvy consumers is essential.
Products That Make a Difference
Dealerships need a portfolio of A-rated, exceptional service products to offer their customer base. Different customers will always have different service needs, as well as different ideas on what they need. Being able to offer customers products through an effective digital process is key and needs to be incorporated. Selling and presentation processes need to be perfected for an in-store or online experience — you need both options. Good F&I managers will establish a comfortable rapport with your customers in the store, and you need to make sure that the online experience also translates into an exceptional user experience.
Often, when you go to a dealership’s website, you find a wealth of information about the cars, but very little or nothing about the F&I products. Customers need to be informed about these products and how they add significant value and peace of mind. People want to be taught about things that will protect their investment, and today’s automobiles are indeed a significant investment. Dealers also need to make certain they have an effective strategy that addresses the F&I products that provide for their target market. It’s important not to miss out on these opportunities to serve and sell. For example, certain parts of the country may do extremely well with windshield, tire, and wheel products, while some larger cities may be akin to maintenance plans and vehicle service contracts. It cannot be stressed enough how important it is to know your customers, know your target market, know your products, and align an F&I sales strategy that benefits everyone, because that will ultimately be in the best interests of the dealership.
Another important factor is earlier introduction of F&I benefits to customers. Sales and F&I need to work hand-in-hand to properly represent and address the needs of prospective customers. F&I should not be the afterthought but interwoven into the fabric of the sales presentation. The dealership’s sales professionals should be introducing available benefits before customers ever get to the F&I office. That can only happen with truly effective hands-on training across the product lines for not only the F&I specialists, but for the entire sales team.
Speaking about products, be selective about what you are selling, and be even more specific about what you put into your reinsurance program. This is where your F&I agency should step up as your partner. It’s the role of an F&I agent to train and elevate the F&I team’s ability to consistently produce great results and profits for the dealership. Your agency partner should provide quality, A-rated product recommendations and free training for your F&I team and other dealership employees. Your sales team should be encouraged to take part in these training sessions. Your agent should also be providing you with a good F&I checklist and conducting deal audits providing you with quarterly assessments of participation levels.
Placing a Steadfast Focus on Training
It’s also important to place an emphasis on compliance issues with the ever-changing, stringent automotive dealership laws and regulations. Many dealership owners don’t have the time or manpower to manage mandatory compliance issues. Here again, your F&I agent partner can provide invaluable assistance. Training your management team, F&I team, and sales team regarding compliance is paramount in your efforts to move forward in a profitable manner without instances of having to pay hefty fines for failure to comply.
Trends show that F&I products are more profitable than ever for dealerships. Consumers are looking for more protection against unexpected expenses. F&I managers and sales teams need to have a thorough understanding of the products the dealership is offering, as well as being properly trained, to be able to guarantee their dealership can maximize on the new consumer mindset. Customers won’t buy your F&I products if they don’t know they exist or don’t understand them.
Neil Brennan is general manager for Vanguard Dealer Services.