Sunday, February 01, 2009

Expanding the “I” in F&I

There are profits to be had bundling aftermarket accessories into the F&I process if departments are willing to work together for the good of the customer and the dealership.

Recently the question was asked, “With the current lending trend of limiting the amount of the advance for the traditional F&I products and services, how do dealerships keep the profit margin?” “

For those of you who have been listening to my presentations at some of the parts conventions over the past few years the answer is easy:. It’s time to think non-traditional, it’s time to partner up with the parts department. Parts and accessories represent an opportunity for the dealership as a whole. For years I have watched as thousands of dollars have walked out the dealership doors and been directed elsewhere by non-parts department personnel.

Accessories sales are a huge business; if you think otherwise just look at Camping World. Ask your self what is the difference between Camping World and your dealership’s parts department? Personal service is the answer. If a dealership had a person to properly demonstrate how the accessories can enhance the RVing experience I am convinced the dealerships would sell more and capture those lost opportunities.

In-house Hurdles

Perhaps a change is needed in the dealership culture, as we know it. Instead of independent companies within a company, each department viewing the others as a full retail customer, they should share the wealth and create either inter-department teams or create a compensation plan that rewards keeping the related sales within the dealership.

Here is the beginning place for questions:. Who to charge with the duties of demonstrating the accessories? How exactly to compensate the presenter? Is it possible to share the profit margin between departments?

We must first realize that in order for anything to sell, it needs a sales representative to follow the selling steps. Sales means the producer must share in the profits. The sales process is driven by rewards. If the presenter simply is paid by the hour they have no incentive to make the sale.

Currently, the parts department manager is stuck on maintaining their 35 percent or more profit margin. Here is how I see it: The part department can continue to maintain their current profit margin and watch their sales maintain their current pace. Or they can share the profit margin of the things that the F&I department sells and they can grow their department.

What this opportunity represents is growth, not taking from the current activity. The price charged for say, a generator, must be the same for the customer regardless of what department they purchase the item in. The benefit for the customer is that if they purchase a generator in the F&I process they will be able to include it in their financing.

Creating Synergy

Create a list of the things that the parts department has to sell that can be classified as “hard adds” accessories for the RV. This a list of items that can be added to the RV and included in the amount financed provided the customer can withstand the increase in payment.

Selling additional accessories must be done after the commitment to purchase the RV and before the financing is arranged. Keep in mind that nothing will be added to the RV until the funding is secure and the dealership is paid. You can work out those details between departments.

Having the customer view this list after the sale of the unit is agreed too and just prior to F&I can keep the customer focused on the sale instead of rethinking the decision. And it will provide a time for the F&I manager to check the computer data entry.

This “accessory sales process” is completed on the first visit, and takes only minutes - not hours. The F&I and parts manager can work together to create a list of items and perhaps create a small presentation book of not more than four pages with pictures of customers using the items.

The whole premises is that Together Everybody can Achieve More (TEAM). Create your new TEAM today and begin to capture those lost profits.

RV Pro Magazine, February 2009, P. 24 – 25