Margin compression is real and it’s something your dealers deal with every month. It’s also an area in which agents can provide leadership to produce growth in their dealers’ overall profits.
We know the F&I department is a major contributor to dealership profitability. Dealers retain a much higher percentage of the dollars generated in F&I. So if we empower F&I, we turn up the profits!
Here are three ways you, as an agent, can help lead your clients toward a more empowered F&I department and drive profitability.
1. Empower F&I on the Showroom Floor!
When the F&I manager gets involved early in the transaction the customer’s comfort level increases which leads to a more open discussion throughout the process. An F&I manager should review the credit application and credit bureau report with the customer prior to submission to a lender.
This provides an essential check and balance system, ensuring the information provided to the lender is accurate. It also demonstrates to the customer that the F&I department is there to help them with their financing, not just sell them products after the fact.
Each dealership must determine a game plan that includes who will be responsible for what part of the buying process. Who will take the credit application? Who will review the credit information with the customer and who submits it for funding, among other considerations?
"An empowered F&I department is critical in a compressed margin environment in dealerships today."
The more of the credit process the F&I manager is involved in — and the earlier they get involved — the more trust is built with the customer. The more trust is built, the more F&I products they will buy.
If the F&I manager is not involved until after the loan is approved and the payment agreed upon, the customer perceives they are enduring two separate transactions. They need to see the sales and F&I department working as a team to get them into the vehicle they want at a payment they can afford.
The entire sales and F&I process should be seen as an efficient and productive use of their time. When this happens profits go up!
2. Empower the F&I Conversation!
One of the most impactful ways to drive F&I profits is to improve the conversation with customers. Quality questions that move the customer to talk 70% of the time will increase customer interaction and trust. And it will uncover more customer needs for the products offered.
Working together with F&I managers to develop high quality questions and where in their process they will ask them is imperative to a more productive conversation. Combine that with great listening skills and you have a genuine conversation that leads to more F&I product sales and profits.
The conversation should reveal the F&I manager has the knowledge and expertise to enable the customer to make wise decisions in connection with their vehicle purchase. Using a consumer website like autoconsumerinfo.com to review the factory warranty remaining adds third-party credibility — and sets up the sale of multiple F&I products.
Read: Master the Ability That Matters Most!
Relating specific knowledge about larger diameter alloy wheels and the aspect ratio of tires helps educate and inform consumers. Sharing the cost of actual repairs other customers recently experienced, relayed in a knowledgeable conversation, builds value and trust.
F&I professionals are accustomed to sharing general information, such as “There are a lot of computers on a vehicle today and they are expensive to replace.” Customers tend to doubt the accuracy of this information and question whether it is made up or exaggerated.
Specific information, such as “The cost of replacing the ABS actuator on this vehicle is $2,467,” is more credible. Customers trust it and are comfortable using it as a basis for their decisions.
Photo courtesy of Reahard & Associates
3. Empower F&I With Instore Coaching!
Every professional needs a coach! In fact, the coaching effort should involve a combination of classroom instruction, instore coaching and monthly role-play activities to ensure the most effective efforts are being used to help customers make good decisions.
The initial class should lay a solid foundation for a customer focused process demanded by today’s hyperinformed buyer. The instore coaching should build upon that foundation and ensure the F&I manager is comfortable with and utilizing that process with every customer.
The instore training can be provided by the agent, an F&I director or an outside partner. However, there must be consistent effort each month to keep every manager’s skills sharp and ready for the next customer.
Read: 5 Things You Cannot Teach an F&I Professional
Today’s technology allows actual transactions or role-play efforts to be easily recorded and then played back to review body language, voice inflection, and overall ability to overcome objections.
It is amazing to see the reaction of an F&I manager when a recorded review takes place. It’s almost always different than the way they thought they sounded or came across. Seeing themselves onscreen will help any F&I manager identify areas of strength as well as where they can improve their process. That will empower F&I and turn up the profits!
With today’s automated computer driven vehicles, the importance of F&I products to the consumer and the overall profits of the dealership have never been higher. An empowered F&I department is critical in a compressed margin environment in dealerships today.
As their agent and a trusted partner, you play a key role in increasing your dealers’ F&I product sales, profits, and customer satisfaction.
Rick McCormick has more than 25 years of sales experience, with over 6 years in the retail automobile business and currently serves as the national account development manager for Reahard & Associates.
