F&I is a Critical Hub
During boat shows, many manufacturers include a service agreement with the purchase of the boat. When manufacturers give away added protection, they eliminate one of the critical profit centers of the F&I department.
With deals like that, how can F&I continue to grow and contribute a service to the customer and add to the dealership’s bottom line? Simple, F&I growth requires products, in addition to service contracts.
THINK PACKAGES
• Mechanical protection: This can be made up of a service contract, pre-paid maintenance (winterization/summarization, perhaps storage) and tire and rim protection for the trailer. Even though we talk about all these items together, we separate the additional cost of each product both on the menu, and on the purchase order and retail installment contract.
• Equity protection: This is GAP (Guaranteed Asset Protection), credit life, credit accident and health insurance. The presenter must be licensed to present life and accident and health insurance. Please check with your local Department of Insurance to see if your state has a special credit insurance license. If it does not, then the presenter needs to have a class A insurance license. This will require study, classes, an appointment and an exam followed by continuing education. For all the work, it is a plus. Businesses and lenders will generally accept the added advance to pay for the premium, provided the customer can budget for the new payment. Unless the customer has 30 percent cash down, every customer should be given the opportunity to have GAP protection. In most states, GAP policies pay the difference between the loan balance and the market value, plus the insured’s physical damage insurance deductible.
How do you locate a provider of these policies in your area? Easy, call your lenders and ask them to fax over a list of approved providers. Then call the providers and ask for a representative. Perform due diligence and check references on both the representative and the company. Ask for a Certificate of Insurance for the company to minimize your contingent liability.
Have presenters read the policies so they have a full understanding of what the coverages are. Best business practice is always to under-promise and over-deliver.
• Appearance Protection: You should also provide customers the opportunity to take advantage of appearance protection. Companies offer exterior and interior protection for the marine industry. The UV index is higher on water than it is on land. If you wish to check the index in your area, visit www.epa.gov/sunwise/uvindex.html. When the EPA page comes up, scroll down to where you enter the zip code and then click on the search button. You will then see the UV index as of noon that day, and you will be able to read what the EPA recommends be done to protect the human body during the day.
My question is this, what are your customers doing to protect their new boats? It is a great segue into taking exterior protection. Most recreational vehicles, including marine, retail this coverage by the foot. Longer crafts need more product and take more labor to apply. So retailing it by the linear foot makes sense.
Many marine dealerships will also have accessories that are available through the F&I department. While some dealerships sell accessories through the sales department, others save that opportunity for the parts department, and still others allow F&I the opportunity.
I am sure you can come up with many opportunities if you spend a little time looking at what is available in the parts department and identifying what is not selling. Remember, often the item is not selling because no one is demonstrating it. With a little effort those items could be adding fun to the boating experience for your customers and be adding additional profit to the dealership.
The magic of the F&I department is the personnel follow the 400 percent rule – 100 percent solicitation, 100 percent of the products and services, 100 percent of the time, to 100 percent of the customers.
Boating Industry, March 2008, P. 35