According to an article in The Harvard Business Review, increasing customer retention rates by 5% can increase profits by 25% to 95%. This is based on research conducted by Frederick Reichheld of Bain & Co. While that is a wide range, it reveals that minimal increases in retention rates can have huge effects on profitability. HBR also reports that it is between five and 25 times more expensive to acquire a new customer than it is to keep an existing one. In the case of automotive dealerships, the F&I process has the potential to have a dramatic impact as to whether the customer leaves the dealership with the expectation of returning, as well as recommending its services or not. Let’s look at principles that will provide the best experience.
Great Experience - Most customers are excited about their vehicle purchases. We must craft what they experience in the F&I process to focus on maintaining and adding to that excitement. We should add value, not frustration, to the process! Early engagement with the customer by the F&I professional, and all at the dealership focused on helping them, ensures the customer is all-hands-on-deck.
A recent CDK survey shows that 37% of customers waited more than 30 minutes for an F&I manager in 2023. While that is a significant improvement, it is still making 37% of our opportunities more difficult. Making the process about helping, not selling, the customer ensures them that we are looking for solutions that will make the entire ownership experience more manageable and enjoyable. Even the appearance of our office will tell them if it is a sales environment or a helping environment. I challenge you to stand at your office door and look around your office. This is the immediate impression a customer gets. Make sure the office conveys comfort, relaxation, and that help is on the way!
Great Products - Every product we offer leads them back to us. Whether it is a red light on the dash or a nail in a tire, customers come to us for the coverage to make their lives easier and at minimal cost. We must know what our products cover, as well as how the claims process works. If customers have an issue and the process works well for them, they will never buy a vehicle from anywhere else. They know we will take care of them when problems arise. The retention value built in the F&I office will be underscored or undermined by the process!
Call the product provider of every product you offer and learn about the claims process so you can explain it in detail to a customer. The most powerful tool to move customers to see the value in a product is to explain “what this means to you.” Be ready to explain this in detail. When customers see that you have a full understanding of this, they trust you, and they trust that the product will work for them!
Great Focus - It is not about you! What the customer sees, feels, hears and experiences should always be the focus. The experience of buying a vehicle can be challenging and even scary. Once customers see you are making it all about them and their needs, they relax and think, “This is going to be different, and different is good!” Making the process interactive and proving what you are saying with visible and tangible research will make the customer realize that you thought about him or her long before the customer came to your office. Customers will reward that effort with trusting you and trusting the dealership with repeat business and recommendation. Retention rocks!
Rick McCormick is national director of training for Reahard & Associates.
DIG DEEPER: They Key to Future Profitability Is Service Retention
