History is rife with prophetic statements proven as accurate as an Enron accounting ledger. In 1943, IBM founder Thomas Watson said, “I think there is a world market for maybe five computers.” In 1962 Decca Recording Company rejected the Beatles, saying, “We don’t like their sound and guitar music is on the way out.” And in 2008, equally hard to believe, it seems some Powersports dealers are saying, “It doesn’t make sense to pursue F&I.”

“Most powersports dealers don’t focus on finance and insurance because they don’t believe there is money to be made,” says Barry Usher, dealer principal of Hi-Mountain Recreation Motorsports in Billings, Montana. “They would really benefit most by sending their F&I staff to training, learning the products available and understanding that there are great products for our customers … and good money to be made.”

Let’s look at seven common excuses why some powersports dealers don’t get F&I, and discuss why that thinking needs to change.

“We can’t make any money.”

Some powersports dealers think the only way to make F&I profit is by maximizing the markup above the wholesale rate. Unfortunately, nothing could be further from the truth.

With a reasonable point or point-and-a-half markup, or even using a wholesale rate and flat fee configuration, there are many ways a dealership can do good things for their customers while earning money for the store. Here are a just few:

• Profit dollars earned selling extended service contracts.
  

• Added reserve fee dollars earned by financing extended service contracts.

• Profit dollars earned selling guaranteed asset protection (GAP).

• Added reserve fee dollars earned by financing GAP contracts.

• Commission dollars earned selling credit life and disability insurance.

• Added reserve fee dollars earned financing credit life and disability.

• Pre-paid maintenance product profit.

• Added reserve fee dollars earned financing pre-paid maintenance plans.

There are others, such as added dollars earned on the sale or referral of cycle insurance, reasonable fees earned for the acquisition and execution of vehicle registration documents, and dollars earned for other protection products. You can probably name even more.

Successful business is about creating multiple revenue streams. Your finance and insurance department is filled with them. Marking up above the wholesale rate is but just one small piece of the puzzle.

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“Customers don’t want that F&I stuff.”

No customer wants a closed-loop fuel injection system, but most customers do want easy cold starting and smooth throttle response. Oftentimes, inexperienced business managers will present a product, state the price, and then ask the customer for the sale. “Our extended service plan is $1,200, do you want it?” Compelling, huh?

Don’t make the mistake of thinking customers know what your plans cover and how it will improve his or her situation. Tell the customer about the benefits of F&I products, such as a vehicle service plan or GAP insurance, which provide breakdown cost coverage, roadside assistance, and meals and lodging compensation.

The customer will appreciate the fact that you are trying to protect his or her financial profile and the vehicle’s integrity. Remember, F&I is about protecting them with the right package during their period of ownership.

“F&I products are too expensive.”

If you compare the spending power of someone earning $30,000 dollars a year to the spending power of someone like Actor George Clooney, you will discover a $275,000 house for you would seem like pocket change for someone like George.

The point is, just because you think something is expensive doesn’t necessarily mean your customer will, even if the majority of your customers aren’t movie stars or famous athletes.

Present everything to everyone and you’ll be surprised how many customers take you up on your offer. Doing so also protects the dealership against potential discrimination lawsuits.

“The F&I process takes too long.”

The F&I process might seem like it’ll add too much time to the sales process, but it really shouldn’t. One way to streamline your operation is to diagram your sales process to see what’s happening and where the time is being spent.

Efficient turnovers, quick applications and online lender interfaces all work to speed up your process. It’s also a good idea to talk to your lenders to find out what they look for in an applicant. There are rules governing how a customer who is self-employed is financed, so they may need to have tax returns, proof of income and proof of residency handy.

Another way to make the time go by quickly is to keep your customers occupied with meaningful and relevant activities. Remember, your customers would rather have a frontal lobotomy than watch you type or make a phone call.

Introducing the customer to the dealer principal, the service staff, parts and accessory people is not only a good use of your customer’s time, but it also a great way to establish meaningful customer relationships.

The F&I experience should be a meaningful, profitable and seamless addition to your sales process, and should only add about 20 to 30 minutes to the process. What you’ll realize once you make the move are those 20 or 30 extra minutes will be more profitable.

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“Is saddling customers in a long-term revolving payment right?”

Most customers are driven to the dealership by those attractive finance promotions. While these promotions do well to attract showroom traffic, are they right for your customers?

As you know, the fine print on those promotions clearly state the special payment offer is for a limited term on a revolving account. That’s why you shouldn’t be afraid to talk to your customers about all of their payment options.

Here’s what I would say: “We certainly offer the promotion you mentioned for customers who qualify. However, there are may be some other reasons why conventional financing makes more sense for you. First, let’s pick out the bike that’s right for you. We’ll get some information from you, and show you all of your payment options. Then you can decide.”

Explain the differences between a long-term revolving loan and an installment loan to a customer. A long-term revolving account may give the customer a low monthly payment, but it builds very little equity during the promotional period. In an installment loan situation the monthly payment is higher because it includes some principal and interest, but equity builds at a faster rate.

Whichever payment type a customer chooses, remember both processes have a place in every powersports F&I office. An F&I manager can fund the unit and GAP on the installment contract, and fund the service contract and tire-and-wheel products on a revolving account. Just make sure the customer is aware he or she will have two accounts and two separate payments when all is said and done.

“We don’t want a bad rap.”

The automotive retail industry has wrestled with its bad rap for some time now. According to a 2004 Gallop Poll, car sales were voted the least trusted profession, followed by lawyers and advertising executives. So it’s fair to be cautious about getting that type of label. However, don’t throw the personal watercraft out with the lake water just yet.

There are great car dealers and Powersports dealers you can emulate. Take the positive, leave the underhanded.

“My customers won’t get approved.”

A dealership’s lender mix should cover the full credit spectrum. That means having a couple of lenders who cater to the subprime consumer segment. It’s also important for F&I managers to establish personal relationships with loan underwriters, as it allows them to understand what the bank needs and the type of deal it will buy. This will also help you make meaningful suggestions when trying to get a deal bought, such as getting a bigger down payment from the customer, adding a qualified co-applicant or co-signer, or possibly selecting a more finance-appropriate motorcycle.

“Smaller shops look at the finance office as a cost,” states Marq Smith, president of Western Powersports in Langley, British Columbia. “It’s a shortsighted view they should be looking at the value to the dealership.”

Mark Rodgers is an award-winning author, trainer and founder of Peak Dealership Performance. He can be reached at mark.rodgers@bobit.com.