Competing in a Digital World

Before Seth Schlenger took over responsibility of the finance and insurance office at Kemna Auto Center in Algona, Iowa, the dealership heard plenty of complaints about the time required to close deals. 

It could take six or seven hours to buy a car because of a bottleneck in the F&I office, and it wasn’t because people were buying a lot of add-on products. In fact, in 2018, the dealership averaged only $550 of add-ons per vehicle. So Schlenger made it a priority to streamline efficiency while increasing profitability. 

By 2022, the wait time for customers to complete a sale had dropped to three hours, and the dealership now averages $1,450 per vehicle on F&I products. 

Kemna Auto Center, a GM franchise store for over 65 years, recently completed a new $4 million facility to sell Ford and CDJR vehicles. Before COVID-related disruptions, the dealership sold between 900 and 1,200 cars and trucks a year. Today, Schlenger predicts that when inventory levels return to normal, the company will sell between 100 to 150 vehicles per month.

He started working for an auto dealership while attending college in Colorado but returned to his roots after getting married and going to work for General Manager Tom Kemna, who has been with the company for 30 years.

“I enjoy working in F&I because I get to meet and talk to every customer buying a car,” Schlenger says. 

However, he didn’t just want to the the “guy people speak to at the end.” He wanted to play a larger role at the dealership in hopes of someday transitioning into a general manager position.

So, after taking over the F&I office, Schlenger began a top-to-bottom analysis of every aspect of the sales process. Then, he went to work converting as much paperwork as possible to a digital system while still complying with state regulations. 

“Now almost everything works on an iPad,” he explains. “I get digital signatures on everything except three required paper forms: the odometer reading, damage report and title application.

“Streamlining allowed me to focus on making sure paperwork was complete and 100% accurate before a customer walked into my office,” he adds. “Now I have more time to chat and establish a personal relationship with each customer. I want to know everyone by name.”

Digital challenges

Kemna Auto Center was already at work adopting a streamlined process before COVID problems began. The corresponding restrictions accelerated the process. 

Schlenger’s biggest challenge with converting everything to digital was in knowing he would be solely responsible for any legal matters if a problem occurred. To be sure everything was accurate, he spoke with people from the Iowa Automobile Dealers Association and the state department of transportation. 

“Now it is almost impossible to miss a signature with our new system,” he explains. “We can’t move to the next form without collecting a signature in the right place.”

Over 85% of finance institutions used by the dealership are set up for digital contracting. Instead of waiting on snail mail for 7 to 10 days to get a contract funded, the dealership now completes transactions in less than 30 minutes. 

“Going digital means I’m no longer searching through paper copies to see where we need signatures,” Schlenger explains. “The system guides me from point to point, indicating where a signature or initial is required.”

Kemna uses MaximTrak’s Route One software for its digital menu needs with Tachyon’s customer relationship management system. Both firms worked with Schlenger to build dealership processes to work seamlessly with the software. The staff uses 700Credit to help manage credit compliance. 

“We invested hundreds of hours to ensure everything complied. Except for installment contracts, we can do all forms within the system, whether it is a cash or financed deal,” he explains. “The 700Credit system automatically sends me weekly reports showing anything I might have missed. That includes risk-based pricing and other forms, like adverse action letters sent to people who could not get credit approval.”

Schlenger performs monthly audits on at least 10 percent of all contracts. Once a year, his boss will randomly pick a month and audit 100% of all transactions to ensure everything is in compliance. 

Documentation Training

To ensure everyone can use the system and knows what’s expected, Schlenger helps onboard new staff to train them about documentation requirements. He developed a sales and delivery checklist that outlines every detail about a deal, the vehicle, and related documents needed from a customer. 

“We place all that in a special blue folder which the sales manager must approve before it comes to the finance department,” he explains. “I’m the third set of eyes to review all the documents before we turn over a vehicle to the customer.”

Besides the internal onboarding process, all sales staff members take classes offered by Protective. F&I Friday is part of regular staff meetings where Schlenger discusses some aspect of the sales process or provides new information so everyone is aware of what must be done. Every January, he reviews with staff the exact steps needed to complete a purchase agreement and credit application. 

Meeting Sales Goals

“I have backend access to every salesperson’s data so that I can look at their business development process for managing leads,” he explains. “I run daily sales and financial reports to see what’s coming in. Then I share our numbers with the other staff and perform monthly and annual follow-ups as well.”

To reward staff, managers publicly applaud salespeople every morning for any big deals they closed the day before. Schlenger offers a $1,000 spiff to the salesperson with at least eight deals the previous month who has the highest penetration percentage for paint protection products sold by the dealership. 

He also created $100 coupons for salespeople to give to customers who buy service contracts. After a salesperson makes a deal, he or she can present a coupon while describing the advantages of having a service contract before the customer even enters the F&I office. The salesperson who has the most redeemed coupons that month also receives a spiff incentive.

Overcoming Online Sales Competition

Digital retailing is the greatest challenge facing Kemna Auto Center because 98% of all deals can be completed online today, says Schlenger. 

“Places like Carvana have not helped in that regard,” he says. “They claim to complete an entire deal online, but that’s not true because a customer will still have to personally sign some paperwork.”

He is challenged to present products in a way that doesn’t hurt the dealership when prospective customers research options online. Because so much of the sales process can be completed online, the reduced time people spend face-to-face with Schlenger could hurt F&I sales.

“We are uploading all our digital retail solutions online to explain what our products are, the benefits they offer and why a customer may or may not need to purchase something,” he explains. “This should prevent overwhelming customers with information in the F&I office and having them wonder why they weren’t told about any of it before meeting with me.”

One sales strategy involves doing online interviews where Schlenger explains the ins and outs of various products during face-to-face video conversations. That will ensure they complete more paperwork online and reduce the time customers spend inside the store when picking up a car.

“Everything we do must be 100% transparent and explained in detail. Nothing can be hidden,” he adds. 

Kemna Auto Center invests a great deal of time and money to support the Algona community by participating in special events and sponsoring activities, like a golf tournament, Easter egg hunt or visit from Santa. The dealership awards annual scholarships to graduates from area public and private schools. The staff also works with local colleges to train technicians, so students have jobs after graduation. 

Schlenger has participated in multiple chili cookoffs, and other staff have engaged in local trivia contests, too.

“I don’t want customers to feel as though they are just a name on a list. I want them to know everything about us before they leave in a new vehicle,” Schlenger says. “We are a personal, family-oriented business with such close relationships that customers will sometimes call me or their salesperson to schedule a service appointment rather than speaking with the service department directly.”

Ronnie Wendt is an editor at F&I and Showroom.