Focus on the ‘I’ in F&I
If you’re not using the finance department to sell insurance or hard add-ons your dealership is missing out on additional revenues.
F&I can make a skinny deal a better deal and turn a good deal into a great deal. When the economy is in a downward plunge, income generated in the finance department can mean dealership survival. Importance of 100% Turn to the F&I Process
This is the time to evaluate your current process. Do you have a policy of 100 percent turnover to the F&I presenter when customers first commit to purchasing a unit? If your store still has a salesperson writing the purchase order, taking the deposit check, walking out the customer and saying, “See you on Tuesday,” you should make immediate changes.
Every time a customer leaves the dealership without seeing an F&I professional, potential income walks out your doors. How many times has a customer come in for delivery with a check made out to the penny for the purchase and sees the F&I person for the first time?
If it happens once, that is one time too many.
Most people finance larger purchases. Where are your customers obtaining their funds? Ask the title clerk about the liens placed on titles. Few titles go directly to the customer.
In today’s economy, most people want to keep their money close to them. Every opportunity lost by your store is an opportunity given to another company.
Why do sales consultants steer customers to other sources of financing and other resources for accessories? One reason could be Fear. Fear of losing the deal, fear of losing margin and fear of losing creditability.
The additional income that supplements dealership core revenue comes from the finance department’s suite of products and services. What we are actually doing is utilizing a two-close process. The first close is the commitment on the sale of the vehicle. The second is how the customer pays for the vehicle and how he protects the new purchase.
Traditionally, customers do not spend money to save money. However, they do spend money to protect what they already have.
When sales consultants achieve the final commitment to purchase, often they are convinced that the customer has no additional funds. However, the customer usually leaves the dealership and goes to another store to spend additional funds on containers, chairs, folding tables and other items to enhance the RVing experience. This activity represents lost revenue to your parts department.
What does this have to do with F&I? Simple, F&I can tee up the person to visit your parts department first. F&I can provide financing for additional purchases. F&I can even sell some hard add-on items, such as generators, extra air conditioners or one-touch awnings.
All it takes is for the parts department to reward the F&I person who sells the item. I call it, “Sharing the wealth with the producers.”
F&I is certainly more than title work and typing documents. F&I is a critical, integral part of every successful dealership. The time is now to revisit your current processes, revisit your education plan and perhaps even re-implement your revenue enhancement plan.
Revenue Enhancement Means Products
If you are looking for additional profits you must provide the F&I presenter with quality products, services or accessories to sell. Revenue streams are more than finance reserve and service contracts. You need tire and rim policies. Additionally, Coach-Net is a service that makes dealerships look good and frees up the service department from non-income telephone calls from new RVers with questions and also the experienced ones who need roadside assistance.
Many dealerships have a difficult time getting service departments to apply protective coatings to the outside of RVs. Find a solution to this dilemma. If the service department does not want to do the application, hire someone else or outsource it. Protective coatings provide a solid value for the customer and protect the RV from the harmful UV rays of the sun.
Another untapped revenue stream is accessories sales. Yes, I know many of you have parts departments. Ask yourself, how are they really doing? Could they do better? What would be the result of having F&I sell accessories (hard add-ons) that could be included in the financing? The answer is simple if the parts department is willing to price the accessories at a point to allow F&I (the producer) an income stream from the effort.
Who in the dealership has a physical damage insurance license? This license allows dealerships to enjoy commissions and renewal commissions on a policy that every financed deal must have. The RV-specific policy provides excellent coverage and many times the premium is lower than other outside options.
Do research and compare the marketplace. After you do, I am sure you will agree it makes sense to ask all customers if you can provide them with a quote and a brochure in order for them to compare coverage prior to delivery. Most of the time, the customer will elect to have insurance through you.
Most states allow F&I departments to sell GAP insurance to customers they secure financing for. This is a policy that protects the negative equity in the deal if the unit is a total loss by either accident or stolen and not recovered. Some may think that offering a GAP policy sends the message that customers are being overcharged for the unit in the first place.
I ask you to think about this: GAP is a policy that is widely recognized in the auto industry as a lifesaver when it comes to a loan deficiency on a total loss situation.
Down payments are generally less than they were 20 years ago and loans are longer. Most people know that without sufficient cash down or enough positive equity going into a loan, they are in a negative equity situation from the beginning.
GAP is a recognized product that most people who finance want. The correct message should be that this is a policy to assist customers in a time of need. Together, with the insurance settlement, it will cancel the debt if a vehicle is a total loss.
How do you find an approved GAP company? Easy, ask your lending sources to fax you a list of approved companies. Then make the call, ask for a representative to stop by, request a copy of their certificate of insurance and complete your due diligence.
Finding the “I” in F&I is identifying the income possibilities and implementing an action plan to ensure customers are provided every opportunity to say “yes” to added products and services that they may purchase elsewhere. The “I” stands for Income. If your store needs additional income, I cannot think of a faster way than implementing a sound process with quality products and services.
RV Pro Magazine, June 2008, P. 32 – 35